Chairman of the Senate Finance Committee Max Baucus speaks on health-care reform at a press conference on Capitol Hill
How much does the bill cost, and will it add to the deficit?
In a press release accompanying the release of the bill, Senate Finance Committee Chairman Max Baucus says the legislation would cost $856 billion over 10 years and would not increase the deficit. The nonpartisan Congressional Budget Office, which put the bill's total cost at a lower $774 billion, says the bill would actually reduce the deficit by $49 billion between 2010 and 2019.
Is there a public option?
No. As an alternative to the controversial government-run health option, the bill, beginning in 2012, would provide $6 billion in federal funding to states or groups of states to set up nonprofit, consumer-owned and -operated health-insurance cooperatives. These cooperatives would be unaffiliated with any government entity and would be self-insured — meaning cooperatives would collect premiums from members and pay out claims from those funds. Cooperative insurance plans would be available to consumers through the state exchanges that are to be set up as part of the reform plan.
How would the exchanges work?
By 2010, each state would be required to establish an exchange, or marketplace, where insurance will be sold. Initially, only individuals and businesses with 50 or fewer employees would be eligible to shop in the exchanges, but by 2017, states would have to develop plans to phase in larger employers. By 2022, all businesses would be eligible to purchase coverage through the exchanges.
Insurance plans for sale in the exchanges would be vetted by the Federal Government to meet minimum standards for coverage. There would be a range of plans offered in the exchanges: bronze, silver, gold and platinum. Bronze plans would be the cheapest, offering the least amount of coverage; platinum plans, the most expensive, offering the most coverage.
"All plans must provide preventive and primary care, emergency services, hospitalization, physician services, outpatient services, day surgery and related anesthesia, diagnostic imaging and screenings (including X-rays), maternity and newborn care, pediatric services (including dental and vision), medical/surgical care, prescription drugs, radiation and chemotherapy, and mental health and substance abuse services ... In addition, plans could charge no cost-sharing (e.g., deductibles, copayments) ... for preventive care services ... Plans could also not include lifetime limits on coverage or annual limits on any benefits."
The exchange would also offer a high-deductible plan for adults under 25. This plan would be cheaper than the bronze plan and is referred to as a "young invincible" policy.
What new restrictions would be placed on the private health-insurance plans?
Insurers would no longer be able to exclude applicants based on pre-existing conditions or charge higher premiums for those with pre-existing conditions. Insurers would have to offer coverage to anyone who applies for it and would be allowed to adjust premium rates only based on tobacco use, age, family size and geographic location.
Tobacco users could be charged 1½ times what non–tobacco users are charged. The oldest Americans buying private insurance could be charged five times what youngest Americans are charged. And insurers would be banned from capping the amount they pay out on a policy annually.
Would there be an individual mandate?
Yes. Beginning in 2013, individuals would be required to have health insurance. Individuals and families who do not have insurance for more than three months in a given year would be subject to an annual excise tax of $750 and $1,500, respectively, if their income is below 300% of the federal poverty line (or $66,150 for a family of four). Tax penalties for individuals and families with incomes above that would be $950 and $3,800. The excise tax would be waived for Native Americans and individuals and families whose health-insurance costs would be more than 10% of their annual income.
Would there be an employer mandate?
No. But employers would have to pay an annual tax penalty if any of their workers receive subsidies to purchase insurance through the exchanges. The tax penalty assessed to the employer would be either $400 per worker (regardless of how many workers receive subsidies) or the average cost of subsidies in a given year multiplied by the number of workers receiving them in the company — whichever is lower. (Businesses with fewer than 50 employees would be exempt from this tax.)
"For example, Employer A, who does not offer health coverage, has 100 employees, 30 of whom receive a tax credit for enrolling in a state exchange offered plan. If the flat dollar amount set by the Secretary of HHS for that year is $3,000, Employer A should owe $90,000. Since the maximum amount an employer must pay per year is limited to $400 multiplied by the total number of employees (for Employer A, 100), however, Employer A must pay only $40,000 (the lesser of the $40,000 maximum and the $90,000 calculated fee)."
Plus, if employers have 200 or more employees and offer health-insurance coverage, they would automatically have to enroll workers, although workers could opt out of coverage if they prove they have insurance from another source.
What kind of subsidies would the government offer to low-income Americans and small businesses to help them buy insurance?
Starting in 2013, the Federal Government would offer a refundable tax credit to low- and middle-income individuals and families who purchase certain policies through the state exchanges. The credit would be available to individuals and families who earn up to 300% of the federal poverty level, which for a family of four would be about $66,000 in 2009. It would be provided on a sliding scale, with the level of credit "based on the percentage of income the cost of premiums [not including deductibles or copays] represents, rising from 3% of income for those at 100% of poverty to 13% of income for those at 300% of poverty." Individuals earning between 300% and 400% of the poverty level would be eligible for a credit after their share of the premium hits a maximum of 13% of income. The credits would be paid directly to insurers through the exchange, with policyholders paying the remaining amount.
Qualifying small businesses that offer their employees health insurance would be eligible for a tax credit to offset their contribution to the costs of the policies. An employer with up to 25 full-time employees whose average annual wages are no more than $40,000 would have access to some part of the credit, though only companies with no more than 10 employees who earn an average of less than $20,000 a year would be eligible for the full credit. In 2011 and 2012, the full credit would be up to 35% of a small business's contribution, and starting in 2013, employers that purchase their policies through the state exchanges could claim a tax credit for two years of up to 50% of their contribution.
Would the health-care industry have to pay for the cost of reform?
Beginning in 2010, insurance companies would have to pay an annual total of $6 billion; pharmaceutical companies, $2.3 billion; medical-device makers, $4 billion; clinical laboratories, $750 million. The amount each individual company pays would depend on their market share.
Pharmaceutical companies would also, per an agreement struck with the Obama Administration earlier this year, cut name-brand-drug costs 50% for Medicare Part D recipients stuck in the "doughnut hole," the gap in prescription-drug coverage that exists once seniors' drug costs for the year exceed a certain amount ($2,700 in 2009). This provision would go into effect in 2010 and is expected to cost drugmakers $80 billion over 10 years. (Part D beneficiaries who get low-income subsidies, are enrolled in a retiree drug plan or earn more than $85,000 would not be eligible for the discount.)
Would "gold-plated" Cadillac plans be taxed?
Yes, although technically insurers would be the ones taxed. Beginning in 2013, they would pay a 35% excise tax on any plans they sell that cost more than $8,000 for individuals and $21,000 for families. But even though insurers would be paying, they would almost certainly pass along this extra cost to consumers. Nearly all of these so-called Cadillac plans are sold through employer-based coverage, often to union workers and municipal employees.
To make employer-based coverage more transparent, the bill would also require that W-2 forms list the total cost of premiums paid by employers.
Is medical-malpractice reform addressed?
The Senate Finance Committee does not have jurisdiction over malpractice law, but the committee's bill includes a section expressing support for malpractice reform. The section specifically endorses reform approaches like those expressed by President Obama: funding for pilot programs to study ways to reform the malpractice system without capping malpractice awards.
How would the Medicaid program be affected?
Beginning in 2014, eligibility for Medicaid would be raised to individuals earning up to 133% of the federal poverty line — $14,400 for an individual; $30,000 a year for a family of four. Childless adults, currently excluded from Medicaid, would be eligible.
Would federal funds be used to finance abortions?
Those eligible for federal subsidies to purchase insurance through exchanges would be able to choose from at least one plan that covers abortions beyond those in the case of rape, incest or to save the life of the mother (the exceptions that Medicaid and other federal programs currently allow) and one that doesn't. Those private plans that do offer the services would have to segregate funds internally to make sure that only individual premiums, and not federal subsidies, pay for actual abortion services.
In the health-insurance cooperatives, coverage for abortion services would not be explicitly prohibited. Consumers owning and operating the cooperatives would be able to decide if they want to cover abortion.
Would illegal immigrants be allowed to participate in any new health-insurance system established in the bill?
No. The bill would require individuals and families eligible for subsidies to prove their citizenship by providing their names, Social Security numbers and dates of birth. Those who cannot prove their citizenship would not be allowed to purchase insurance through the exchanges, with or without subsidies.