Revamped health care bill has 9 major changes

Kaiser Health NewsMarch 19, 2010 

WASHINGTON — In their attempt to pass a sweeping health care overhaul this weekend, Democrats in the House of Representatives are pushing a package of legislative revisions to lure undecided or opposed members of their party to the "yes" category.

Proposed changes to the health care bill that the Senate passed include a scaled-back tax on high-cost health insurance plans — a provision that's widely unpopular with House Democrats — and more money to help states pay for an expansion of Medicaid, the state-federal health program for poor people and those with disabilities.

The new measure, called a reconciliation bill, also would take additional steps to close a gap in Medicare prescription-drug coverage and to help low- and middle-income Americans purchase health insurance through new insurance exchanges.

If the House approves it Sunday, the Senate would consider the package under a process that would require just 51 votes for passage rather than the 60-vote threshold to break a filibuster. President Barack Obama has postponed a scheduled trip to Asia to be in town to help persuade wavering Democrats to vote for the bill.

A preliminary estimate Thursday from the Congressional Budget Office concluded that the compromise bill would reduce the federal budget deficit by $138 billion over the next decade, a finding that may help House Speaker Nancy Pelosi, D-Calif., and her leadership team fight charges from Republicans, who say the bill is too big and too expensive and would disrupt the current health care system.

Here are some of the major changes the reconciliation proposal would make to the Senate bill:

HEFTIER SUBSIDIES: Compared with the Senate legislation, the reconciliation bill would provide more generous subsidies to low- and moderate-income Americans to help them buy coverage.

THE "MASERATI" TAX: The levy on high-cost insurance plans is scaled back and delayed, rendering it more a "Maserati" than a "Cadillac" tax. It would apply only to the portion of plans that cost more than $10,200 a year for individuals, up from $8,500, and $27,500 for families, up from $23,000. The tax wouldn't kick in until 2018, reducing the projected revenue to the government by 80 percent. Over time, however, the tax would hit more and more plans, because its threshold is set to increase at the rate of inflation, while premiums are expected to continue to grow much more quickly than that.

CLOSING THE "DOUGHNUT HOLE": Unlike the Senate bill, the reconciliation measure eventually would close the coverage gap, called the "doughnut hole," for Medicare beneficiaries who are enrolled in Part D drug plans. Currently, seniors who hit the gap then must bear the full cost of their medications until they spend a certain amount, when coverage kicks back in.

Under the new bill, seniors who hit the gap this year would get $250 each to help cover the costs of their medications. Starting next year, they'd get 50 percent discounts on brand-name drugs, with the cost borne by the drug industry. In subsequent years, the discounts would expand and begin covering generic drugs, with the government picking up the expense. By 2020, the discounts would reach 75 percent.

SHIFT IN MEDICARE ADVANTAGE PAYOUTS: Government payments to Medicare Advantage, the private-health plan alternative to traditional Medicare, would be cut back more steeply than under the Senate bill: $132 billion over 10 years, compared with $118 billion.

The government currently pays the private plans an average of 14 percent more than it does traditional Medicare. The new bill, besides reducing payments overall, would shift the funding; some high-cost areas would be paid 5 percent below traditional Medicare, while some lower-cost areas would be paid 15 percent more than traditional Medicare. The Senate's plan that would have shielded some areas of the country, such as South Florida, from major cuts largely was eliminated.

A RAISE FOR DOCTORS: Primary care doctors would get Medicaid payment boosts in the reconciliation bill. Beginning in 2013 and 2014, the doctors' payment rates would be on par with Medicare rates, which typically are about 20 percent higher than Medicaid. The goal is to ensure that there will be a sufficient number of doctors who are willing to care for the millions of additional people who'd become eligible for Medicaid under the health care overhaul.

PUSHING UP THE MEDICARE TAX: The Senate bill adds 0.9 percentage point to the Medicare payroll tax on earned income above $200,000 for individuals or $250,000 for couples. Under the reconciliation bill, starting in 2013, people in those income brackets also would face a 3.8 percent tax on investment income, such as interest, capital gains and dividends.

PENALTY FOR NOT HAVING INSURANCE: Under the new bill, most Americans without insurance would face an annual penalty, starting in 2014 at $95, the same as in the Senate bill. In following years, however, the penalties in the reconciliation bill are slightly different. Those without insurance in 2016, for example, would pay the greater of two alternatives: a flat fee of $695, down from the Senate's $750, or 2.5 percent of their incomes, up from 2 percent in the Senate bill.

EXPANDING MEDICAID: The reconciliation package here differs from the Senate bill in several ways. It would delete a provision — dubbed the "Cornhusker kickback" — that would have exempted Nebraska from paying any cost of a Medicaid expansion included in the bill. However, it would provide full federal funding to all states for newly eligible Medicaid recipients for three years. It also would give additional funding to states, such as Vermont and Maine, that already have moved to cover adults without children, which isn't required under the Medicaid program.

MEDICARE SPENDING BOARD: The Senate bill would create an independent, 15-member board to recommend ways to control Medicare spending. The board remains in the reconciliation package, but it would be expected to produce only about half of its original projected savings of $23 billion in the Senate bill. That's because the new proposal would make greater cuts in Medicare Advantage plans.

(Jordan Rau and Phil Galewitz of Kaiser Health News contributed to this story.)

(Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy-research organization that isn't affiliated with Kaiser Permanente.)

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