Congressional Healthcare Reform Provisions
Key Provisions
1. Federal Underwriting Standards. After a specified date, new insurance policies sold in either
the individual or group markets must:
cover a specified minimum benefit package;
be offered on a guaranteed issue, community rated basis; and
limit annual out-of-pocket costs to no more than $5,000 for individual coverage and
$10,000 for family coverage, indexed to general inflation.
2. Individual Mandate. All legal residents would be required to enroll in health insurance plan
meeting certain minimum standards or face a tax penalty.
3. National Insurance Exchange. Certain individuals and small employers would be eligible to
purchase insurance through a national exchange. Individuals up to 400% of the federal
policy level purchasing insurance through the Exchange would receive premium and cost
sharing subsidies on a sliding scale designed to limit their cost as a percentage of income
ranging from 1.5% to 11.0%. Such individuals would be required to report changes in
income or family composition during the year to have their subsidy recalculated.
4. Public Plan. A public plan would be offered through the Exchange. the Plan would pay
Medicare plus 5% for physicians and other practitioners. Medicare providers would not be
required to participate in the Plan.
5. Medicaid Reform.
Eligibility would be extended to all nonelderly individuals and families with income
at or below 133% of the FPL. The Federal government would pay 100% of the cost
of newly eligible enrollees. States would be required to maintain their current
eligibility levels for existing groups indefinitely.
Rates for primary care services would progressively increase to 100% of Medicare
rates by 2012, with the Federal government paying 100% of the cost of those
increases.
6. Employer Mandates. Firms with an annual payroll above $250,000 must offer and make a
minimum contribution (72.5% of premium for individuals, 65% for family) for coverage that
meets the Federal minimum benefit standards. Firms that fail to meet this requirement would
be subject to a payroll tax ranging between 2% - 8% depending upon size of payroll.
7. Employee Option. Full time employees with an offer of employer sponsored insurance could
receive subsidies through the exchange only if their contribution for that coverage was
deemed unaffordable, i.e., exceeding 11% of their income. Employers offering coverage
would be required to pay the Exchange a percentage of their average payroll per worker for
each employee obtaining coverage through the Exchange.
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Congressional Healthcare Reform Provisions
8. Tax Credit for Small Employer. A tax credit equal to an employer’s share of premiums
would be available to very small employers. It would phase out as employer’s size and
average wages increased.
Cost Estimate
CBO Cumulative Cost Estimate 2010-2019: ($ billions)
Exchange Subsidies $ 773
Medicaid Expansion $ 438
Employer Pay-or-Play Payments ($ 163)
All Other Net ($ 6)
Total ($1,042)
Cost Control
1. Prevention and Wellness. Expand Community Health Centers; prohibit cost-sharing for
preventative services; create community based prevention and wellness programs.
2. Workforce Investment. More investment in training of primary care providers; increases to
the National Health Service Corp.
3. Delivery System Reform
Revise payment approaches to reward high quality and efficient care, improve care
coordination and reduce hospital readmissions, e.g., comparative effectiveness,
bundled payments.
Eliminate SGR formula.
Step up enforcement of waste, fraud and abuse.
Simplify paperwork burden.
Financing Alternatives
1. Income Tax Surcharge. A surtax ranging from 1.0% - 5.4% on the 1.2% of US households
with the highest adjusted grow income, beginning at $280,000 per year for an individual and
$350,000 for couples.
2. Tax Employer Provided Health Benefits. Tax on employer provided health coupled with an
offsetting (refundable) tax credit based on the cost of a “standard” benefit package.
3. Medicare Payment Reform. Reduce the cost of Medicare, presumably though application of
comparative effectiveness standards and reform of the payment system, e.g., global and/or
bundled payments.
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