Provisions of the House Health Care Bill

[matt]

CQ TODAY PRINT EDITION
Nov. 5, 2009 - 11:26 p.m.
Provisions of the House Health Care Bill


After months of talks and committee work, the House plans a Saturday vote on the top Democratic legislative priority, a sweeping bill (HR 3962) to remake the nation's health care system and extend insurance coverage to millions of Americans. The House is expected to open the historic debate with consideration of a manager's amendment drafted by Democratic leaders as part of a rule governing floor debate.

Here are the key features of the bill being sent to the floor:

Coverage Requirements

Individual Mandate
· Requires nearly all individuals to obtain health care coverage, beginning in 2013.

· Permits individuals to keep their current health plan as a "grandfathered" plan.

· Excludes from the mandate those exempt from filing income tax returns and others
who receive a hardship waiver.

· Subjects those who do not obtain coverage to a penalty tax of 2.5 percent of adjusted gross income above a threshold.


Employer Mandate
· Requires employers to offer their employees health care insurance, or make an insurance contribution on their behalf, starting in 2013.

· Exempts firms with payrolls of $500,000 or less.

· Subjects businesses that fail to provide coverage to penalties of up to 8 percent of their payroll.


Purchase of Coverage

Health Insurance Exchange
· Creates a federal exchange, to begin operation in 2013, that would allow individuals and small businesses to purchase health insurance from insurers participating in the exchange.

· Allows states to apply to operate their own state-based health insurance exchanges.


Public Option
· Requires the establishment of a public health insurance option within the insurance exchange by 2013.

· Directs the Health and Human Services Department to run the public option and negotiate with providers to determine rates.

· Requires those rates to be no lower than those under Medicare and no higher than the average for private plans.


Additional Options
· Authorizes loans to entities that want to create health insurance cooperatives.

· Permits states to enter into compacts that allow for the sale of insurance across state lines.


Affordability
Individual Subsidies
· Provides affordability credits to individuals and families with incomes of up to 400 percent of the federal poverty level.

· Requires that subsidies would be used to reduce premiums and out-of-pocket costs.


Small Businesses
· Provides tax credits for certain small businesses that offer health insurance to their employees.


Insurance Company Requirements
Pre-existing Conditions
· Bars insurance companies from denying or reducing coverage based on pre-existing medical conditions, beginning in 2013.

· Restricts how long insurers can continue to limit coverage for pre-existing conditions until the full ban takes effect.

· Prohibits companies from considering domestic violence a pre-existing condition.


Coverage Caps
· Prohibits annual or lifetime coverage limits.


Premiums
· Limits variations on premiums based on the age of the beneficiary to a ratio of 2-to-1.

· Permits variations on premiums based on geography and family size.


Out-of-Pocket Expenses
· Limits annual out-of-pocket expenses to $5,000 for an individual and $10,000 for a family.

· Guarantees no out-of-pocket costs for preventive care.


Antitrust
· Repeals the blanket antitrust exemption for health insurers, making companies liable for price-fixing, dividing up markets or creating monopolies.


Medicare and Medicaid
Medicaid Expansion
· Expands eligibility for Medicaid by allowing enrollment for those making up to 150 percent of the poverty level, beginning in 2013.

· Beginning in 2015, states would pay 9 percent of costs associated with the expanded coverage.

· Requires Medicaid to cover newborns during the first 60 days of life.


No 'Doc Fix'
· Fails to include a "doc fix" provision that would eliminate the cost-control formula governing the Medicare reimbursement rate for physicians.


Prescription Drug Coverage
· Phases out the coverage gap, or "doughnut hole," for the Medicare prescription drug program by 2019.

· Pays for the cost of eliminating the coverage gap by requiring drug manufacturers to provide rebates.


Medicare Advantage
· Reduces payments under the Medicare Advantage program over a three-year period beginning in 2011.

· Makes the rates for Medicare Advantage the same as those for traditional fee-for-service Medicare by 2014.

· Provides bonus payments to insurance plans in the program that offer high-quality insurance plans in low-cost areas.


CHIP
· Transfers children eligible for coverage under the Children's Health Insurance Program to either Medicaid or the health insurance exchange in 2014.


Revenue Provisions
Health Care 'Surcharge'
· Imposes a tax surcharge of 5.4 percent on adjusted gross income exceeding $500,000 for an individual or $1 million for a joint return.

· Does not index the surcharge for inflation, meaning it would apply to more taxpayers as inflation affects income levels.

· Raises an estimated $460.5 billion through fiscal year 2019.


Excise Tax
· Imposes a 2.5 percent excise tax on the sale or lease of medical devices.

· Raises an estimated $20 billion over 10 years.


Health Savings Accounts
· Limits contributions to health flexible savings accounts to $2,500 per year, indexed to inflation.

Increases the penalty for non-health related distributions for health savings accounts.

· Raises an estimated $14.6 billion over 10 years.


Interest Allocation
· Delays for nine years rules allowing multinational companies to change the way they allocate interest expenses between foreign and U.S. sources.

· Raises an estimated $17.1 billion over 10 years.


Reporting Requirements
· Requires payments to corporations to be reported.

· Raises an estimated $17 billion over 10 years.


Economic Substance Doctrine
· Codifies into law the judicial economic substance doctrine that governs questionable transactions made solely for tax purposes.

· Raises an estimated $5.7 billion over 10 years.


Tax Treaty Benefits
· Limits certain tax treaty benefits.

· Raises an estimated $7.5 billion over 10 years