Summary of the New Proposals

Proposal #1:

House Bill (H.R. 3962, passed November 7):

Proposal #2:

Senate bill (H.R. 3590, passed December 24):

Individual Mandate
Everyone must enroll in health coverage or face a penalty equal to 2.5% of their income (but the penalty canít exceed the cost of the coverage itself). A person is exempt from the penalty if hey can demonstrate there's no insurance option they can afford.

The same except that the penalty starts at $95 per uncovered family member in 2014, (or .5% of income, which ever is greater), rising to $750 per year by 2016 (or 2% of income, which ever is greater).

New Health Insurance Store
For those without a "qualified " coverage option (such as employer coverage, Medicaid, Medicare, or military health coverage), there are new coverage options offered through a type of store called the health insurance exchange.

The national exchange would feature a new public insurance plan option, in addition to private options. 		Similar, except the exchange would operate at the state, rather than the national level.

The state exchanges would feature new "multi-state" plan options – new, national private insurance plans regulated by a federal agency, at least one of which would be a non-profit plan.

Medicaid
Medicaid is expanded to include all low-income people (citizens and legal immigrants) who make less than 150% of the federal poverty level. That means individuals with annual incomes up to about $16,250, and couples with incomes about $21,900 could now qualify. Larger families could have higher income and still qualify for Medicaid.

States with more generous Medicaid eligibility standards are required to maintain them.
Increases payment rates for primary care providers.

Medicaid is expanded to include all low-income people (citizens and legal immigrants) who make less than 133% of the federal poverty level. 

If higher, states are required to maintain Medicaid eligibility standards currently in place for adults until 2014 and eligibility standards for children until 2019.

CHIP
The State Childrenís Health Insurance Program would be eliminated in 2014.  CHIP eligible children would move to Medicaid (if under 150% of FPL) or would purchase discounted coverage thorough the exchange. CHIP-eligible children will have the choice of enrolling in their state’s CHIP program or using credits to purchase coverage through the exchange. Federal financing for CHIP is extended through 2015.

New Rules for Insurance Companies

Insurers can no longer deny coverage based on someone's pre-existing medical condition.

The premiums they charge can only vary by age, geographic area and family size within a given benefit design. Variation for age cannot exceed 2:1 meaning that the oldest policyholders cannot pay more than twice that of youngest policyholders.

Until 2013, insurers must also spend a set portion of those premiums for medical care, as opposed to profits or administration. If the spending on medical care falls below that amount, the excess premium must be rebated to policyholders.

Must allow children through age 26 to stay on their parents’ individual or group health plans.

 

Similar: Insurers can no longer deny coverage based on someone's pre-existing medical condition.

Within a given benefit design, the premiums they charge can only vary by age, tobacco use, geographic area and family size. Variation for age cannot exceed 3:1. 

Until 2014, insurers must also spend a set portion of those premiums for medical care, as opposed to profits or administration. If the spending on medical care falls below that amount, the excess premium must be rebated to policyholders

Must allow children through age 25 to stay on their parents’ individual or group health plans.

Help Paying For Coverage
Individuals and families under "400% of the federal poverty level " can get help paying for their premiums if their coverage is purchased in the exchange. Premium credits would be available on a progressive sliding scale for single person who makes less than $43,000 a year. Larger families are eligible at higher income levels.

If they have other qualified coverage (like employer coverage), they are not eligible for this help, unless their cost of that employer coverage exceeds 12% of income.

Similar: Individuals and families under "400% of the federal poverty level" can get help paying their premiums if their coverage is purchased in the insurance exchange.  The amount of income the family is expected to contribute (after subsidy) is generally higher than in the House bill. Also, the coverage that the subsidy purchases is somewhat less generous than the House bill.

If they have other qualified coverage (like employer coverage), they are not eligible for this help, unless their cost of that employer coverage exceeds 9.8% of income.

Employer Incentives to Cover Workers
All employers with a total payroll greater than $500,000 face new requirements, but they are similar to what most employers do now. Employers can either contribute to coverage for their workers, or they can pay into a fund that helps pay for coverage for workers purchasing in the health exchange.

If an employer chooses to contribute to employeesí coverage, they must contribute a certain level (for example, 72.5% of the premium for single coverage for a full-time worker).  After five years, this contribution must be for coverage that meets certain standards (for example, covered benefits must include preventive care, hospitalization, prescriptions, etc).  Most companiesí current health plans would meet the standards. Smaller employers ( total payroll less than $500,000) are exempt from this requirement .

If an employer has over 50 workers and has workers who purchase health insurance using the new tax credits, then the employer will have to pay into a fund that helps finance those credits. 

Generally, workers with an employer coverage option cannot get coverage to purchase in the exchange. Thus, the provision would mainly apply to employers with more than 50 employees who don’t offer coverage.

If they have workers who enroll in Medicaid coverage, no employer fee is assessed.

COBRA
COBRA coverage would continue.

The bill also extends the period of COBRA eligibility by allowing laid-off workers to continue COBRA until they become eligible under a new employerís health plan or for coverage in the health exchanges		 The Senate bill continues current law with respect to COBRA.

Special Rules for Small Employers

In 2013 (the first year of operation), small employers with 2 5 or fewer employees may offer the exchange coverage to their employees. These employers would have to comply with the new rules regarding minimum employer contributions to workersí coverage (for example, 72.5% of the premium for single coverage for a full-time worker). Employers up to size 100 may offer exchange coverage in later years. (Employees who purchase in the exchange through their employers are not eligible for the premium discounts offered to lower-income individuals who buy in the exchange .)

Very small employers with low-wage employees could receive a tax credit to defray some of the cost of coverage. These employers must have an average wage of less than $40,000 and fewer than 25 employees. The maximum tax credit is 50% of the employer’s contribution to the premium.  The size of the credit declines as employer size goes above 10 employees and average wage goes above $20,000.

Employers with a total payroll of less than $500,000 are exempt from the new rules requiring employers to either meet minimum standards for coverage for workers, or to contribute to a fund that helps pay for coverage for lower-income individuals.

In 2014, employers with 50 employees or less may offer the exchange coverage to their employees.   As in the House bill, employees who purchase in the exchange through their employers are not eligible for the new premium credits that individuals who buy in the exchange can apply for.

Beginning in 2014, small businesses up to 100 employees can purchase coverage through the exchange.

Small businesses are eligible for tax credits similar to those in the House proposal , except that the credits are only available for exchange coverage and employers with an average wage of $50,000 are eligible.

Employers with 50 workers or less are exempt from the new penalties facing larger employers if their workers purchase health insurance using the new individual tax credits.

Changes to Medicare
Beginning in 2011, the Part D coverage gap known as the "doughnut hole " will begin being phased out, so by 2019 the gap disappears. During this phase out, seniors who fall into the doughnut hole would get discounts of 50% for brand-name drugs.

Also beginning in 2011, if a drug plan makes a change to its list of covered drugs that increases the seniorís costs or reduces their coverage, that person has the right to change plans before the end of the plan year.

Preventive services such as physicals breast exams, mammograms, glaucoma screening and other services would be completely paid for (no co-pays). Payment rates for primary care providers would also increase.

Provides new funding for research into treatments for chronic diseases that affect many elderly Americans.

Attempts to cut waste and end overpayments to insurance companies to strengthen the long-term financial health of Medicare and provides incentives to improve care for seniors treated in the hospital so they are not rehospitalized.

Provisions are similar to those in the House bill EXCEPT the “doughnut hole” is NOT phased out. The “doughnut hole” is narrowed by $500 and seniors who fall into the doughnut hole would get discounts of 50% for brand-name drugs.

Medicare Advantage Plans
Because the government currently pays private Medicare Advantage plans about 14% more for each senior enrolled than in traditional Medicare, a new payment method will seek to lower those taxpayer costs and help extend the life of the Medicare Trust Fund. By 2013 payments to Medicare Advantage plans must equal the average cost of "traditional" Medicare enrollees in that geographic area.

Prohibits Medicare Advantage plans from charging cost-sharing for specific services (like home health) that exceeds the cost-sharing in traditional Medicare.

Beginning 2014, requires Medicare Advantage plans to spend at least 85% of their premium revenues (from enrollees and from the government) on medical services. If plans spend less, they must rebate the difference to their enrollees.

Provisions are similar to those in the House bill EXCEPT :

  • Parity between Medicare advantage payments and traditional Medicare is phased in between 2012 and 2015 with special transition assistance provided for regions with very high levels of Medicare Advantage benefits currently.
  • Does not collect or publish health plan medical loss ratios