How the Senate Bill Would Change Healthcare

[See why health insurers make lousy villains.]

Thelast hurdle is a high one, though. Like most of the deliberations sofar, the House-Senate negotiations will probably be rancorous andtense, with familiar standoffs over the cost of healthcare reform, newfees and taxes, the virtues of a public option, abortion coverage, andpet projects rolled into the bill even though they have nothing to dowith healthcare. Obama had hoped to have a signed bill that he couldtout during his State of the Union speech,which typically occurs in late January or early February. But the twochambers may still be dickering when Obama takes to the podium. Still,momentum is building toward a historic set of new rules that willprofoundly change healthcare, for better or worse.

Onereason the final negotiations will be so daunting is that both billscontain hundreds of provisions that would impose new rules on insurers,healthcare providers, employers and patients, while also setting upnumerous pilot programs to experiment with ways to provide better,cheaper care. Here are a few provisions of the Senate bill that wouldimpact consumers the most, with a summary of how the House billcompares:

Required coverage (the "individual mandate").American citizens and legal residents would be required to have healthinsurance, or pay a fine. For an individual, the fine would be $750 peryear or 2 percent of household income, whichever is greater; for afamily, the maximum fine would be $2,250 per year or 2 percent ofhousehold income. The fines would go into effect gradually, starting in2014. The House bill is similar, with exemptions for certain low-income people.

Employer obligation. Companies with more than 200 employees would be required to enroll their workers in a health insurance plan,with no ability for employees to opt out. Companies with more than 50but fewer than 200 workers would not be required to offer insurance,but if they didn't, they'd have to pay a fee of $750 per employee eachyear (with some variations). Companies with fewer than 50 workers wouldnot have to offer insurance or pay any fees. Those rules would go intoeffect in 2014. The House bill would place similarrequirements on employers, but with a different way of determiningwhich companies are required to offer insurance.

[See 4 countries with better healthcare than ours.]

Government-run health insurance (the "public option"). There is no public option in the Senate bill. The House billwould establish a government-run insurer that would compete withprivate insurers offering coverage to those not covered by theiremployers. The public option is one of the biggest differences betweenthe House and Senate bills, and is likely to be one of the biggestbattles as healthcare reform hits the home stretch.

Insurance exchanges.This is how people would buy insurance if they don't have an employerthat provides it. The structure is complicated, but these exchangeswould basically be run by each state in conjunction with the federalgovernment, and states would be allowed to create additional mechanismsfor offering insurance to their residents. Traditional insurance companieswould be allowed to compete for customers through the exchanges,provided they met a set of requirements set by the federal government.The least expensive plans would offer catastrophic coverage only, andnot be available to everyone. There would be several other levels ofcoverage, priced more for each bump-up in benefits. The exchanges wouldgo into effect in 2014. The House bill includes similarreforms, although there would be an additional health-insuranceexchange at the national level. And the public health-insurance plan(not included in the Senate bill) would compete with private plans oneach of the exchanges.

Subsidies to help pay for coverage. In general, government subsidies would help cover the cost of insurance for individuals earning as much as 400 percent of the poverty level.(In 2009, the poverty level for an individual in most states was$10,830; for a family of 4, it was $22,050. So an individual earningless than $43,320 or a family of 4 earning less than $88,200 wouldqualify for some aid.) The House bill has a similar income threshold for subsidies, but a different formula for determining how much the subsidy would be.

[See why more competition won't fix healthcare.]

Medicaid expansion.Eligibility for Medicaid would be expanded to people or familiesearning 133 percent of the poverty level (with exceptions), effectivein 2014. The House bill would broaden Medicaid eligibility to those earning 150 percent of the poverty level, and do so by 2013.

Insurance for high-risk patients.People who can't get traditional coverage on account of a pre-existingmedical condition would be eligible for insurance under a new "nationalhigh-risk pool," with rates comparable to those for the generalpopulation. The pool would go into effect quickly--within 90 days of abill becoming law. The House bill has a similar provision, with different ceilings for allowed premiums and deductibles.

Lifetime limits.Insurance companies would no longer be allowed to cap the amount oflifetime benefits or cancel coverage, unless the patient defrauded theinsurer. Those rules would go into effect in 2010. By 2014, there wouldbe tougher limits prohibiting annual caps on benefits, in addition tolifetime caps. The House bill has similar provisions andwould go a step further by severely restricting insurance companies'ability to deny coverage on account of pre-existing conditions.

New taxes. To help pay for increased coverage, a number of long-standing tax creditsand deductions would decline, while taxes on some other benefits wouldincrease. One of the most prominent changes would be a tax on"gold-plated" health insurance plans that provide lavish benefits butare expensive; the threshold at which the surtax would kick in would be$8,500 for an individual's annual premium and $23,000 for a family's.There's a lot of fine print, however, and some people with gold-platedplans would probably end up exempted from the tax. The House billdoesn't tax gold-plated plans, but raises funds through an additional5.4 percent income tax on individuals earning $500,000 or more peryear, and families earning $1,000,000 or more. All of these new taxesare controversial, creating more flash points for negotiators.

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Abortion coverage.Federal subsidies cannot be used to fund abortion unless the life ofthe mother is at risk or there's a case of rape or incest. The House billhas a similar provision, with an additional stipulation that prohibitsfederal money from being spent on any insurer that provides abortions,even if it's with private funds.

Indoor tanning. Beginning in 2010, there would be an additional 10 percent tax on the cost of indoor tanning services, to help pay for health reform. No kidding. The House bill contains no such provision. Yet.