It is surprisingly hard to find details on HR 3962 which passed the house this weekend. I decided to fix that. Here is my quick summary of the Bill. My comments are not comprehensive, but paint a broad picture of what the bill is about.
The Bill will cost just north of $100 billion for the next 10 years, for a total of $1 trillion. In exchange the bill would guarantee access to health insurance for every American. 96% of Americans are expected to take advantage of it. Rather than overhauling the current system, the bill subsidizes and modifies the current employer sponsored model that most Americans currently use. The Bill is not a revolution, but evolution of the status quo.
Employers Must Provide Coverage: Most Americans get their health insurance through their employer. Some employers do not offer health insurance. The House bill would require all employers who pay more than $500K a year in payroll to offer insurance. The insurance offered must provide a minimum set of benefits and have 70% of the premium paid for by the employer. Companies with less than 25 employees will get a subsidy to help pay for the insurance. Companies that do not offer insurance will have to pay an 8% payroll penalty. If you get decent insurance through your employer today, this bill will keep that arrangement intact. Companies like Wal-Mart have come out in favor of these provisions because they want an even playing field between companies that offer health care benefits versus those that do not.
Individuals Must Buy Coverage: Individuals will be forced to buy health insurance, or pay a 2.5% income tax penalty. If you don’t have employer insurance, you will buy insurance from an insurance exchange, kind of like how we buy electricity in Texas. Families making less than $90K a year would get a subsidy to buy their insurance. The exchange would include a “Public Option” which would be an insurance plan offered by the federal government. The Public Option would appear next to private insurance plans on the exchange and would be required to compete by the same rules as the private plans. A good comparison is to think of how Texans were offered electricity from a regulated default provider when picking through private electricity plans from 2002 to 2007. The “Public Option” for Houstonians was Reliant Energy. Critics hate the public option. Others feel that the public option is critical for containing costs.
Medicaid for More People: Last, the bill will drastically increase the number of Americans eligible for Medicaid by about 8 million people [free Federal Insurance]. Eligibility for Medicaid is very complicated, but a family of four might be eligible if income falls below $20K a year. This bill would push that number up to $35K and reduce the number of cases where the family would not be eligible. Eligibility would be so broad, that the CHIP program (insurance for poor kids) would no longer be necessary, and be defacto abolished. Critics contend that the expansion of Medicaid coverage coupled with the “public option” will eventually lead to a Canadian style single payer health insurance system. Some see this as a good thing.
Funding:
So where do you get $1 trillion to pay for all of this? The House elected to use a combination of new taxes and program cuts.
Medicare Advantage Funding Eliminated: $200 billion comes from ending subsidies to the Medicare Advantage program. These subsidies were meant to encourage private insurers to offer alternatives to Medicare. 8.2 million people signed up for these private plans. It is unclear how many will remain after the subsidies disappear.
Negotiating Drug Prices: Another $200 billion will be saved by removing the ban on drug price negotiation from Medicare. When President Bush pushed for the establishment of Medicare Part D in 2003, drug companies successfully lobbied to forbid the program from negotiating its drug prices. As a result, Medicare currently pays $1,485 for the drug Zocor, while the VA (which is not banned) only pays $127.
Tax the Rich: Close to $500 billion will come from a tax on the rich. Those making $500K ($1 million for couples) will pay a special 5.4% surtax. Critics contend that this tax targets small businesses because S-Corporations are considered ‘individuals’.
Other Stuff: The remainder will come from capping the allocation someone can make to tax free medical savings accounts (which aren’t particularly necessary if you buy health insurance that meets the new federal guidelines), and ending a tax subsidy for retiree benefits.
Some Final Tweaks:
During the debate, a few special items came up that got roped into the reform. They are significant and worth mentioning.
Preexisting Conditions are Illegal: Denying coverage for pre-existing conditions is banned. If everyone already has insurance, pre-existing conditions shouldn’t be an issue anyway, but the bill makes those provisions illegal just in case. No more denying coverage just because you had acne.
Increasing Dependent Age Coverage: The bill Increases the age of dependent coverage from 19 in most cases, to 26. That means that a child can remain on their parents’ insurance policy through grad school, instead of having to buy their own coverage in college.
Abortions are Excluded: The Catholic Church successfully pushed for a ban on Federal subsidies for insurance plans that cover abortions. Private unsubsidized plans are free to pay for abortions.
16 responses so far ↓
1 Mike Harmon // Nov 9, 2009 at 2:46 am
I’ve been reading along for a while now. I just wanted to drop you a comment to say keep up the good work.
2 Rich // Nov 9, 2009 at 10:15 am
Aziz- This is a an excellent summary, with very little apparent bias. Thanks on behalf of the tubes for this.
To me, this sounds we just took the worst of our current system and amplified it. If we want a free market solution, let’s do that. If we want single payer, let’s do that. Either would be better than these worst-of-both-worlds solutions. That’s not surprising however, since the debate in congress never revolved around the real issue staring us in the face: cost.
3 Katie // Nov 9, 2009 at 7:01 pm
I don’t buy it. Looks like you are skipping all of the negatives.
4 Preston // Nov 9, 2009 at 7:43 pm
Don’t buy what. These positives aspects of the bill cant be denied because there true. There are no negatives, and don’t say cost because if we can pay for war and bail-outs we can pay for health care
5 Aziz Gilani // Nov 9, 2009 at 9:59 pm
Rich, Its pretty clear that the primary purpose of the bill was to ensure universal coverage with the system we currently have. You are right to point out that cost savings are treated as an after-thought. Lets see what the Senate comes up with.
6 Rich // Nov 15, 2009 at 3:13 pm
Aziz, obligatory access to emergency rooms has ensured that nobody who really needed it is generally denied medical care, so universal coverage (while needed) isn’t quite the dire situation it’s made out to be. You can argue that the e-room visits are ridiculously wasteful of resources (as they are), but then we’d be back to the real issue: cost. The bill does nothing to address it, even when assuming e-room visits would drop. I’m afraid all this will net us in the end is an net average lower standard of living, higher public debt, and more corporate welfare.
Preston, since when do two wrongs make a right? If we’re selling the country’s fiscal stability up the river already, how is continuing to do that not a negative?
7 Healthcare Reform: HR 3590 Details in Plain English // Dec 22, 2009 at 6:23 pm
[…] ← Healthcare Reform: HR 3962 Details in Plain English […]
8 Paige // Jan 18, 2010 at 9:01 pm
Thank you so much for a plain language summary of this. I have been really interested in learning about this reform, but dont understand all of the political language that it’s written in. It seems, and I hope, that this was a very unbiased recap of the bill and I really appreciate it!
9 metallo-rusalka // Jan 26, 2010 at 5:14 pm
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11 chkbse // Feb 16, 2010 at 11:36 am
Hello. Please delete this message.
12 redmatch // Feb 25, 2010 at 7:10 pm
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13 ScienceAccope // Feb 27, 2010 at 3:07 pm
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14 VabFleege // Feb 28, 2010 at 7:41 am
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15 Fargaibre // Mar 3, 2010 at 2:15 pm
Hi guys,
I know this might be a bit off topic but seeing that a bunch of you own websites, where would the best place be to host. Someone recommended I use Blue Host for $6.95 a month which seems like a great deal. Anyone here on texvc.com using them?
16 KOMMENTKING // Mar 9, 2010 at 4:43 pm
Hi, thought your readers would be interested in a site called Votetocracy. Votetocracy let’s citizens vote on bills in congress!!! and send their votes totheir representatives. You can vote on both of the health care bills! Check it out!
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