Senate Bill as Expected: Not as Progressive as House Bill in Key Areas

Senator Harry Reid, the Majority Leader, has introduced the Senate's health reform bill. The Patient Protection and Affordable Care Act [1] (PDF), H.R. 3590, is projected to reduce the federal budget deficit in the first 10 years. As The Washington Post reports [2]:

"Democratic leaders were jubilant that the nonpartisan Congressional Budget Office determined that the Senate bill would cut federal deficits by $130 billion over the next decade. That projection, released shortly before midnight Wednesday, represents the biggest cost savings of any legislation to come before the House or Senate this year, but the measure's effective date also was pushed back by one year, to 2014."

The House bill takes effect a year earlier in 2013. According to [3] The New York Times, that one-year "delay is intended primarily to reduce the cost of the legislation."

So, other than the start date, how does the final Senate bill stack up against the House bill in the categories I discussed in my previous post ("House Health Bill Should Be A Model For The Senate [4]")? Pretty much as expected.

1. The Health Insurance Exchange.

Unlike the House bill, which gives the federal government the responsibility, the Senate bill puts the states in charge of creating their own health insurance exchanges. As The Washington Post explains:

"The Senate measure is similar in scope to legislation the House approved earlier this month. It would require most people to buy insurance, and if their employers did not offer affordable coverage, they would be able to shop for policies on new state-based 'exchanges' that would function as marketplaces for individual coverage. Insurance companies would have to abide by broad new rules that would ban practices such as denying coverage based on preexisting conditions."

2. The Public Health Insurance Plan.

The public option will work similar to one outlined in the House bill, except states can choose not to have the public plan offered in their health insurance exchange. Like in the House bill, the reimbursement rates for the public plan will not be tied to Medicare. Instead, the public plan will have to negotiate rates with providers. As The New York Times reports:

"Under Mr. Reid's bill, the government would establish a new public insurance plan, which would compete with private insurers. States could opt out of the public plan by passing legislation."

3. Insurer Transparency and Accountability.

The Senate bill falls far short of requiring the type of transparency from insurance plans that will be required to keep them truly accountable. According to the bill's short summary [5], this is what health plans would be required to disclose:

"The Patient Protection and Affordable Care Act will provide consumers with information about physician ownership of hospitals and medical equipment as well as nursing home ownership and other characteristics."

Read my blog post "Insurers Will Still Not Be Regulated Enough [6]" to see what disclosures should be required of insurers.

4. Affordability.

The Senate bill expands eligibility for Medicaid to include all non-elderly Americans with income below 133 percent of the Federal Poverty Level (FPL), while helping the states with the cost of the expansion. The House bill expands Medicaid to 150 percent of Medicaid.

Both bills provide assistance to people with low incomes (up to 400 percent FPL) to help them afford the health insurance they will be mandated to have.

5. Employer Responsibility.

Unlike the House bill, the Senate bill does not require employers "play or pay" when it comes to providing health coverage to their employees. Instead, it includes a provision [7] that could discourage employers from hiring low-income workers. As The New York Times explains:

"The Senate bill would not explicitly require employers to offer health insurance coverage. But if an employer with more than 50 employees does not offer coverage and if any worker qualifies for a federal subsidy, the employer would have to pay a penalty, typically $750 for each of its employees."

6. Financing.

Unlike the House bill, there's no surtax on the wealthy, but there is a 0.5 percent increase in the Medicare payroll tax for couples who earn more than $250,000 a year.

In addition, the Senate bill imposes a tax on high-premium plans [8]. Health plans that cost more than $8,500 a year for individuals and $23,000 a year for family coverage would have to pay a 40 percent tax on the amount of the premium above those thresholds.

7. Funding of Abortion Coverage and Coverage of Undocumented Immigrants.

The Senate bill makes a less drastic attempt to ensure that there is no federal funding of abortion coverage than the House bill does. As The Washington Post reports:

"Reid took a different approach that may or may not pass muster with abortion opponents, proposing to establish a 'firewall' that would segregate private premiums from federal funding if abortion coverage were offered in the public insurance plan.

"Few details were available Wednesday, but Sen. Barbara Boxer (D-Calif.), an abortion rights advocate who was working to forge a compromise on the issue, said, 'I couldn't be happier. For those who want to keep abortion out of this bill, Senator Reid did it the right way.'

"The National Right to Life Committee, however, called the firewall 'completely unacceptable' and said it utilizes 'layers of contrived definitions and hollow bookkeeping requirements' to permit federal funding of abortion."

In addition, the bills treat undocumented immigrants slightly differently. As The Washington Post explains:

"The Senate bill would bar illegal immigrants from buying insurance through the exchanges, while the House would restrict access only to subsidies and federal programs such as Medicaid, which would be vastly expanded under both bills."