Comparison of Health Reform Bills Reveals Key issues
While people of various political persuasions continue to snipe at the health reform bill that the House of Representatives passed Saturday, the passage of the legislation steps up pressure on the Senate to act, and President Obama screwed up that pressure another notch today. At this point, it’s worth looking at some of the differences between the House bill and the two Senate bills that are being melded into one measure by Sen. Majority Leader Harry Reid. The New York Times has thoughtfully provided an easy-to-read comparison of the major provisions of the three bills, along with some commentary from interested parties.
In what will have the biggest impact on the average American, all three bills require that most nonelderly people purchase insurance if they don’t qualify for Medicaid, which is being significantly expanded. Whereas the House bill requires people who don’t buy coverage to pay 2.5 percent of their income as a penalty, the Senate Health Committee bill imposes only a $750 penalty, which would be less than the House fine for anybody making over $30,000 a year. The Senate Finance Committee measure would fine non-insurance buyers $200 in 2014, with the penalty rising to $750 in 2017. All three bills would exempt people on grounds of financial hardship, and Finance would also leave out people with incomes below 133 percent of the federal poverty level (FPL). The Senate versions would lead to fewer people being covered.
The viability of an individual mandate depends on the level of subsidies that the government provides. In the House version, households with incomes up to 400 percent of the federal poverty level ($88,200 for a family of four) would be eligible to receive premium credits. Individual premium contributions would range from 3 to 12 percent of income on a sliding scale. The Senate Health Committee would also subsidize those earning up to 400 percent of FPL, but the Finance Committee bill would directly subsidize only households with incomes up to 300 percent of FPL. Those with incomes of 300 to 400 percent of FPL would have to pay no more than 12 percent of their income for insurance. It remains to be seen whether the proposed insurance exchanges will lower insurance costs enough to avoid severely crimping the finances of people with moderate incomes.
Finally, let’s consider the contentious issue of requiring employers to cover their workers, which has enraged the business lobbies and was one of the main reasons that the Clinton Plan foundered. The House bill would require employers with payrolls of $500,000 or more to cover their workers or pay up to 8 percent in payroll taxes. The Senate Health Committee would require coverage from firms with 25 or more employees, but would impose a fine of only $750 per full-time employee for those who do not offer insurance. The Senate Finance Committee doesn’t even claim that its bill includes an employer mandate, but it would require firms with 50 or more workers to pay $400 a year for each employee who buys coverage through an insurance exchange. All three bills would provide tax credits to small companies that buy insurance.
I have a modest proposal: Require everyone who is not eligible for Medicaid, including employers, employees, and the self-employed, to pay for insurance through a federal payroll tax that would be scaled to income and payroll size. Then the IRS could allocate the funds, along with government subsidies, to whatever insurance plan a person chose. That would be far simpler and would cost much less to administer than the current system or anything proposed in the House or Senate bills.
Ken Terry, a former senior editor at Medical Economics Magazine, is the author of the book Rx For Health Care Reform. follow all BNET Healthcare posts on Twitter.
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