Making sense of health care reform

The debate just keeps on rolling and it doesn't seem to be cooling down as time goes on.  Many people have strong opinions about health care reform, and they are expressing them online, in the media, in protests at public meetings, at Congressional offices, and on street corners.  There's a lot of rhetoric out there.  But what do the plans really amount to? Here are some of the key components put forth by four of the plans that are under consideration, including the tax effects. All of the points presented are straight from the horses' mouths, with the sources provided. 

 
All of the plans listed below, and other plans that have been proposed can be seen in greater detail at the Kaiser Family Foundation's Web site.
 
Barak Obama’s Plan  
 
Sources:
 
 
 
Overview
 
The Obama plan focuses on eight overriding principles listed in his 2010 budget.  He wants health care reform to:
 
·                     Reduce long-term growth of health care costs for businesses and government.
·                     Protect families from bankruptcy or debt because of health care costs.
·                     Guarantee choice of doctors and health plans.
·                     Invest in prevention and wellness.
·                     Improve patient safety and quality care.
·                     Assure affordable, quality health coverage for all Americans.
·                     Maintain coverage when you change or lose your job.
·                     End barriers to coverage for people with pre-existing medical conditions.
 
How will this plan affect employers?
 
Not specified.
 
What will be mandated for individuals?
 
The plan that is adopted must put the United States on a clear path to cover all Americans.
 
How will the government's role be expanded with the Obama plan?
 
No details for public expansion were provided.  The sources listed pointed out that President Obama signed CHIPRA, the Children's Health Insurance Program Reauthorization Act, which expands coverage to 11 million children.
 
Will there be premium subsidies to individuals?
 
No details of future subsidies to individuals were provided. The following statement was given instead:
 
 "The plan must protect families from bankruptcy or debt because of health care costs."
 
Also, the White House points out that the American Recovery and Reinvestment Act made coverage more affordable for Americans who were displaced from their jobs by subsidizing some of COBRA coverage at 65 percent.   
 
Will there be premium subsidies to employers?
 
Not specified.
 
What tax changes related to health insurance will occur?
 
Not specified.
 
What changes will occur to private insurance?
 
Plans must end barriers to coverage for people with pre-existing conditions. 
 
 
 
Senate Finance Committee
 
Sources:
 
Go to the Senate Finance Committee's Web Site and then select these items:

5-11-09 Baucus, Grassley Policy Options for Expanding Health Care Coverage: Proposals to Provide Affordable Coverage to All Americans
4-28-09 Baucus, Grassley Policy Options for Transforming the Health Care Delivery System: Proposals to Improve Patient Care and Reduce Health Care Costs

 
Overview
 
The plan put forth by the Senate Finance Committee is not a formal proposal, but a framework for reform. It does require all individuals to have health insurance, creates a mechanism, known as a Health Insurance Exchange* so that individuals and small businesses can purchase coverage, and offers subsidies to those with income between 100 and 400% of the federal poverty level. **
 
 How will this plan affect employers?
 
There are two proposals given which are opposite approaches.
 
Option A. Employers with annual payroll exceeding $500,000 will be required to offer coverage and contribute at least 50% of the premium, or pay an assessment. This is known as, "pay or play."
 
Option B.  Eliminate "pay or play." ***
 
What will be mandated for individuals?
 
Everyone must have coverage that meets minimum standards. This will be enforced through an excise tax, equal to a minimum premium percentage for the lowest cost option in the individual's geographic area.  Exceptions will exist for those under financial hardship.
 
 How will the government's role be expanded with the Senate Finance Committee plan?
 
 This version expands the public role in several ways. 
 
Medicaid will cover all persons and families with income up to 115% of the federal poverty level.  This might be implemented by enrolling all populations except for childless adults.  Childless adults can get tax credits to buy coverage through a Health Insurance Exchange, or they could buy into Medicaid.
 
After 9/30/2013, the CHIP will be expanded to those with incomes up to 275% of the federal poverty level, and the Health Insurance Exchange will fill in gaps where individuals could not get coverage.
 
Until the Exchange is fully operational, people ages 55-64 will be able to buy into Medicaid at full cost.
 
For those with disabilities, the two-year waiting period for Medicare will be reduced.
 
Will there be premium subsidies to individuals?
 
Individuals and families with income from 100% to 400% of the federal poverty level will be able to buy insurance through the Exchange, using a refundable credit. The credit amount will be either a percentage of income or a percentage of the premium, and will be subject to other limits.   
 
Will there be premium subsidies to employers?
 
Certain small employers who purchase insurance for employees will get a tax credit.  The full 50% credit might be available to small businesses with 10 or fewer employees and whose employees earn $20,000 or less in annual wages. This is not a refundable credit, is not payable in advance, and phases out with the size of the firm and the amount of earnings.
 
 What tax changes related to health insurance will occur?
 
This plan "considers several health insurance-related tax changes affecting the tax preference for employer-sponsored insurance, health savings accounts, flexible spending accounts, and deductions for medical expenses."  
 
 What changes will occur to private insurance?
 
Insurers will be required to guarantee the issue and renewability of coverage, and to base coverage for small group plans only on age, tobacco use, family composition and geography, not on health status.   All state licensed insurers in non-groups (defined as 2-10 employees) and small groups will be required to participate in the Health Insurance Exchange.
 
 
House Tri-Committee, American's Affordable Health Choices Act of 2009, HB 3200
 
Sources: 
 
 
 
 
 
Overview 
 
This plan requires coverage for everyone and creates a Health Care Exchange.  The plan allows premium and cost sharing credits for those with income up to 400% of the federal poverty level (which calculates to $73,240 for a family of three in 2009). Employers must provide insurance or pay into a health insurance trust fund. Exceptions will exist for certain small employers.  Medicaid will expand to cover those at 133% of the federal poverty level.
 
How will this plan affect employers?
 
Employers must contribute at least 72.5% of the cost of single coverage or 65% of the cost of family coverage for the lowest priced plan that meets the minimum standards.
 
This plan reduces the "pay or play" assessments for small employers based on their annual payroll. For example, employers with annual payroll less than $250,000 will have an exemption. For those in the next higher category (annual payroll of $250,000 to $300,000),  the assessment will be 2% of payroll. A detailed list can be seen by going to the Kaiser Family Foundation Web site and checking the boxes for the House Tri-Committee plan, Employer Requirements, and then click Generate Comparison.
 
Employers that offer coverage must automatically enroll employees into the lowest cost plan, unless employees opt out or voluntarily enroll themselves
 
What will be mandated for individuals?
 
The plan states that everyone must have "acceptable health coverage" or pay a penalty of 2.5% of modified adjusted gross income, maxing out at the average national health insurance premium. Exceptions will exist for financial hardship, religion, and dependents.
 
How will the government's role be expanded with the House Tri-Committee plan?
 
 Medicare will increase to cover everyone under 133% of the federal poverty level and to all newborns without acceptable coverage.
 
 Medicaid payments rates will increase to primary care providers, to 100% of Medicare rates. 
 
CHIP enrollees will receive coverage through the Exchange when it becomes available.
 
Will there be premium subsidies to individuals?
 
This plan will provide affordability premium credits to eligible individuals and families up to 400% of the federal poverty level, for purchasing insurance through the Health Insurance Exchange.  The credits will be based on an average of programs in a given area, and on a sliding income scale. For example, a person with income of 133% to 150% of the federal poverty level could qualify for a credit of 1.5% to 3% of income.
 
This plan also provides affordability cost sharing credits to eligible individuals with incomes up to 400% of the federal poverty level, in order to reduce the cost sharing amounts.
 
Credits are limited to U.S. citizens and lawfully residing immigrants who meet income limits and are not enrolled in employer or individual plans, Medicare or Medicaid or certain other plans. Individuals enrolled in employer plans may be eligible if the employee premium exceeds 11% of the employee income.
 
Will there be premium subsidies to employers?
 
Employers who have fewer than 25 employers who earn average wages of less than $40,000 may be eligible for health coverage tax credits. Those with fewer than 10 employees and average wages of less than $20,000 may get the full 50% credit.
 
Employers who provide coverage to retirees, ages 55-64, may participate in a reinsurance program, which will reimburse the employer for 80% of retiree claims, within certain dollar limits.
 
What tax changes related to health insurance will occur?
 
Individuals who do not have acceptable health care coverage will pay a tax of 2.5% of modified adjusted gross income.
 
What changes will occur to private insurance?
 
Coverage purchased through the individual market will not be acceptable unless it is grandfathered coverage.  Individuals will be able to purchase acceptable plans through the Health Insurance Exchange.
 
This plan will impose the same insurance market regulations relating to guarantee issue, premium rating, and prohibitions on pre-existing conditions in the insured group market and in the Exchange.
 
Consumer protections will be improved by the establishment of uniform standards.
 
A Health Choices Administration will be created to establish standards, set up the Exchange, administer and enforce plan requirements.
 
 
 
Representative Tom Price (Republican Study Committee)
Empowering Patients First Act
(H.R. 3400)
 
Sources:
 
 
Overview
 
This plan allows people to buy coverage individually and deduct the cost of the premiums from their taxes. For those with income below 300% of federal poverty level, there will be refundable tax credits.  The plan will also include the establishment of Association Health Plans and Individual Membership Association created to make coverage available for purchase.  States will be required to provide coverage to up to 90% of children in families with income below 200% of the federal poverty level and to implement high-risk pools or reinsurance programs for people with pre-existing health conditions.
 
How will this plan affect employers?
 
·                     Employers will be permitted to offer employees a defined contribution for the purchase of health insurance in the individual market.
·                     Employers will be required to disclose to employees the total amount the employer spends on the employee’s health insurance premium.
 
What will be mandated for individuals?
 
No mandates. Employers may automatically enroll individual employees in a low cost health plan, provided that employees are allowed to opt out.
 
How will the government's role be expanded with the Tom Price plan?
 
States will be required to cover children from families with income under 200% of the federal poverty level. Once that is achieved, coverage will expand to those below 300% of the federal poverty level.  Premium assistance will be available for Medicaid and CHIP enrollees. Vouchers that can be used to buy private insurance will be provided for those who would otherwise qualify for Medicaid or CHIP.
 
Will there be premium subsidies to individuals?
 
For citizens and legal permanent residents with income up to 200% of the federal poverty level, refundable tax credits will be available up to $2,000 for individuals and $5,000 for families of four. These credits can be used to purchase health insurance on the individual market. At incomes above 200% of the federal poverty level, credits are phased out (and disappear at 300% of the federal poverty level).
 
For those eligible for other health benefit programs, such as CHIP, VA, Medicaid, Federal Employee Benefits, TRICARE, tax credits will replace coverage. 
 
Will there be premium subsidies to employers?
 
 Small employers with 50 or fewer employees will be provided with tax credits, which can be used to set up auto enrollment procedures and to contribute towards coverage for employees who prefer to purchase coverage on the individual market.
 
What tax changes related to health insurance will occur?
 
This plan will reform the tax code to permit individuals to deduct the cost of health insurance premiums, purchased on the individual market, from taxable income, subject to a cap based on national data.
 
Tax credits will be available for those with incomes below 300% of the federal poverty level, which can be used to purchase insurance on the individual market.
 
Physicians will be permitted to deduct the costs of uncompensated care (required by the Emergency Medical Treatment and Active Labor Act), limited to the amount of the Medicare payment for specific service.
 
What changes will occur to private insurance?
 
Insurers will be able to sell coverage across state lines.  These companies will be required to adopt one state as primary, and abide by the rules and regulations of that state.  Premiums for individuals cannot be based on health status at time of renewal. Premiums can be based on claims experience and can vary for those individuals participating in wellness activities.   Individuals whose premiums exceed the national average by at least 10 percent will be permitted to buy insurance in another state.  
 
 
NOTES:
 
*What is a Health Insurance Exchange?
 
Many of the health care reform proposals that are now on the table depend on the creation of a Health Insurance Exchange. According to the Kaiser Foundation, this is an entity that is intended to allow for a more organized and competitive health insurance market. An Exchange might be used to determine eligibility for coverage. It would offer a choice of plans, establish common rules for the offering and pricing of insurance, and make information about insurance available to consumers. The Exchange would also provide a mechanism for enrollment for those without access to insurance through employment. You can read a more detailed description of the functions of a Health Insurance Exchange.
 
**What is the current federal poverty level?
 
The federal poverty level in 2009 for one individual is $10,830. For more details visit the Health and Human Services Department.
 
*** What is “pay or play?”
 
“Pay or play” is a system that requires employers to provide adequate coverage for employees, or subsidize a program that will.
 

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