Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
On Wednesday, Senate Majority Leader Harry Reid (D-Nev.) released a long-awaited version of healthcare overhaul legislation that he intends to submit to the Senate floor. Offered in the form of a substitute bill, the Patient Protection and Affordable Care Act (pdf) is a compromise between two other Senate measures, the America’s Healthy Future Act (S. 1796), which cleared the Senate Finance Committee in October, and the Affordable Health Choices Act (S. 1679), a bill passed by the Senate Health, Education, Labor and Pensions (HELP) Committee this summer. The House passed its own healthcare bill, the Affordable Health Care for America Act (H.R. 3962), earlier this month.
Some key components of this 2,074-page bill include a mandate for most legal residents to obtain health insurance, the establishment of health insurance “exchanges” through which certain individuals and families could receive federal subsidies to help them purchase health insurance on their own, an excise tax on insurance plans with relatively high premiums, regulations of the insurance industry itself, and monetary penalties for large employers that do not offer health benefits.
Unlike the House healthcare bill, the Senate measure would not require employers to provide health insurance benefits to their employees or pay a fee, known as the “pay or play” system. The Senate bill does, however, mandate that firms with more than 50 workers that do not offer health insurance pay a $750 penalty for each full-time worker if any of their workers obtain subsidized coverage through the insurance exchanges. According to a report (pdf) issued by the Congressional Budget Office (CBO), by the year 2019, these employer penalties would equal $28 billion.
Generally, full-time employees who are offered employer-provided health coverage would not be eligible to obtain subsidies from the insurance exchanges, unless these workers had to pay more than a specified percentage of their income to obtain this coverage. Certain small employers that provide health coverage would be eligible for tax credits up to 50 percent of the insurance premiums.
As for insurance policies, starting in 2013, those plans with high premiums (often referred to as “Cadillac” plans) would be subject to a 40 percent excise tax. This tax would apply to premiums exceeding $8,500 per year for individuals and $23,000 for families. In addition, for issuers of health insurance, the bill imposes new standards governing health information, nutrition labeling requirements, and policy requirements. According to a summary of the bill, (pdf) the Patient Protection and Affordable Care Act includes immediate changes to the way health insurance companies do business. For example, the legislation bans preexisting condition exclusions, as well as discrimination based on health status and gender. A list of reforms (pdf) published by Senate Democrats further explains that the bill would prohibit insurers from imposing lifetime limits on benefits and would restrict the use of annual limits. The legislation would also require insurance companies to make some administrative changes, such as outlining coverage options using a simple and standard format to facilitate comparison shopping among plans, and adopting uniform descriptions of plan benefits and appeals procedures, as well as uniform forms and claims processing procedures.
The CBO projects that the Senate healthcare reform bill would cost about $848 billion over ten years. In addition, the CBO estimates that under this bill, 5 million fewer individuals would obtain coverage through their employers.
Sen. Reid has said that he hopes to move forward with consideration of this bill by Saturday. To do so, the Senate would need 60 votes to thwart a filibuster on Reid’s planned motion to proceed.
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