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03.20.10

What Is (and Isn't) in the Health-Care Bill

Will pre-existing conditions be covered? What's the fine for not having insurance? Which states got sweetheart deals? A crib sheet to the health-care bill that passed the House Sunday.

What’s in the Bill

• The health-care bill covers 32 million uninsured—1 million more people than the Senate version of the bill would have, but 4 million fewer than the House’s original bill. While reform will cost $940 billion over the next 10 years, the Congressional Budget Office reports that it will reduce the deficit by $130 billion over the next decade, and by $1.2 trillion in the decade after that.

• The bill will take effect in stages, and some of the most popular measures take effect within the first six months of its passage. Within six months, insurers will no longer be allowed to refuse coverage to kids because of pre-existing conditions. Nor will they be allowed to dump customers because they got sick. And they will be prohibited from capping how much coverage one person can get in a lifetime. Another provision that will become active within six months: Young people can continue to be covered under their parents’ health insurance until they’re 26.

• By 2014, insurers will not be allowed to refuse coverage to anyone of any age because of pre-existing conditions. The year 2014 will also see the opening of state insurance exchanges, in which people can " comparison-shop" to buy health coverage. These plans would have to meet a minimum standard of benefits and would face new, stricter limitations on how much they could vary their premiums based on age. For instance, premiums for the elderly could cost no more than three times the price of plans for young people.

• Compared to the Senate bill, the subsidies for buying insurance are bigger for families making between 2.5 and four times the federal poverty level. Aid will be offered on a sliding scale—families making less would pay less. A family of four making $44,000 would have insurance premiums limited to about 6 percent of the household’s income.

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• House Speaker Nancy Pelosi says the “Cadillac” tax becomes the “platinum Rolls-Royce” tax under the new plan. This excise tax on premium insurance policies—the cushy policies that cover much more care than average ones—has been tailored to affect fewer people and will go into effect later. Now, plans valued at $10,200 for individuals and $27,500 for families will be taxed starting in 2018. Those numbers will be indexed to the rate of inflation, meaning, the point where these plans begin to be taxed will inch upward as the same amount of money, because of inflation, gradually buys less stuff.

• The bill imposes new taxes on wealthier people. Individuals making more than $200,000, and families making more than $250,000, will have to give up more of their paycheck to the Hospital Insurance payroll tax. Instead of paying 1.45 percent like most workers, they’ll pay 2.35 percent. And a new 3.8 percent tax will be added to income from interest, dividends, annuities, royalties, and rents.

• The bill also imposes penalties on people who opt not to have health insurance. If you don’t buy insurance, starting in 2014 you will have to pay an annual fine of $95 or 1 percent of your income, whichever is greater. By 2016, that fine will rise to $695 or 2.5 percent of your income. For an insurance-free family, the fee is $2,085 or 2.5 percent of household income.

• Employers who don’t offer their employees insurance will also pay a penalty: $2,000 per employee. Tax credits will help small businesses offer coverage (and those with less than 100 employers can join insurance exchanges), and businesses with less than 50 workers are exempt. Employers will have to say how much a worker’s health plan costs on their W-2 tax form.

• Several measures intended to create incentives to lower Medicare costs are part of the bill. The Centers for Medicare and Medicaid Services will monitor hospital readmission rates and create cash incentives to encourage hospitals to lower return visits that are preventable. Doctors will be encouraged to form groups that work on improving quality of care, and a pilot program will bundle Medicare payments to urge hospitals to coordinate better. Five years from now, the method for paying doctors will begin rewarding those who provide the best care, rather than the most.

• The bill fills the Medicare prescription-drug benefit’s “doughnut hole.” People who fell within it because their drugs cost more than $2,700 but less than $6,154 will get a $250 rebate in 2010. Next year, they’ll get a 50 percent discount on brand-name prescriptions. The hole will be completely closed within 10 years.

• For the next four years, a temporary reinsurance program will cover people who retired early (ages 55 and up) but who aren’t eligible for Medicare yet (under 64).

• Next year, primary-care doctors and surgeons will get a 10 percent bonus from Medicare. As part of a push toward more preventative care, Medicare beneficiaries will get a free yearly consultation that will craft a plan to help keep them from getting sick. Preventative care will be very cheap under new plans.

• President Obama voiced his opposition to the inclusion of any special deals in the bill made for specific states in order to win the votes of particular lawmakers. Though many such deals were eliminated from the bill (see below), a few remain. A public hospital in Connecticut will get $100 million. In 2012 and 2013, hospitals in Tennessee that treat the poor will get $900 million (a move that Democrats say simply brings the state-funding levels to those of other states). Many residents of the small town of Libby, Montana—some of whom have been made sick by asbestos thanks to a mine now closed there—will qualify for Medicaid benefits. Louisiana will pocket an extra $300 million in Medicaid aid.

• The bill also features new education funding, including aid for colleges that serve lots of minorities. Additionally, only the government will disburse federal student loans, instead of using banks as middleman.

• Finally, the bill contains a few unexpected odds and ends—for instance, tanning beds that use ultraviolet lamps will be taxed 10 percent starting July 1.

What’s Not In the Bill

• The public option that many Democrats originally insisted was essential to health-care reform did not make the cut. That measure would have allowed people to choose a government-backed insurance plan instead of a private insurance policy. The House would have preferred a national insurance exchange instead of the state-based exchanges in this bill, arguing that a national exchange would have led to even lower insurance rates, since more insurers would be competing for more customers.

• The deal Senate Majority Leader Harry Reid cut with Sen. Ben Nelson (D-NE) to win his vote last December became a symbol of ugly deal-making in Washington. Reid promised Nelson that all new Medicaid enrollees in Nebraska would be paid for by the federal government—forever. That favor, derisively known as the "Cornhusker Kickback," was eliminated from the bill. Also cut: a provision that would have allowed 800,000 Floridians to hold on to enhanced Medicare benefits that old folks in other states are losing.

What’s Still Up in the Air

• The abortion issue could still potentially kill the bill, as allies of pro-life Rep. Bart Stupak (D-MI) number enough to prevent Pelosi from getting the 216 votes needed to pass the legislation. Stupak wants to make sure no federal money can be used to cover abortions. Democrats considered adding anti-abortion language to the bill but worried that pro-choice members would flee. (The Senate bill has strict anti-abortion provisions as well.) Another option would be for Obama to issue an executive order in the future that would forbid abortion to be covered in the insurance exchanges. It remains unclear whether Stupak would be happy with that deal.