The health care bill passed by the U.S. House of Representatives on Nov. 7 would extend health insurance coverage to 36 million uninsured Americans. The bill represents a major step forward in addressing several key priorities of Minnesota’s nonprofits.
The House bill passed by a vote of 220 to 215. Minnesota’s Congressional delegation was split with Representatives Ellison, McCollum, Oberstar and Walz voting yes and Representatives Bachmann, Kline, Paulsen and Peterson voting no.
Here’s how the House bill measures up against the Minnesota Council of Nonprofits’ health care principles:
1. Support for small employers, including nonprofit employers. The House bill includes a new employer mandate requiring employers with annual payrolls of $750,000 or more to either provide coverage to their employees or pay a penalty of 8 percent of their payroll (businesses with payrolls between $500,000 and $750,000 would pay a smaller penalty if they did not provide insurance). Businesses and nonprofits with annual payrolls less than $500,000 are exempt.
Small businesses with 10 or fewer employees and $20,000 or less in average wages are eligible for tax credits to help them provide coverage for their employees. Smaller credits are available to businesses with 25 or fewer employees or average wages of $40,000 or more. Unfortunately, the same assistance is not available to small nonprofits, even though they face the same high health insurance premiums as small for-profit businesses. The Senate bill makes small nonprofits eligible for assistance. This issue will need to be resolved by a House-Senate conference committee.
2. Make health care affordable for low-income Minnesotans. The House bill includes a mandate that all individuals obtain health care coverage by 2013 (very low-income individuals are exempt). The bill includes significant assistance to help low-income individuals afford health insurance. Individuals and families with incomes up to 400 percent of the federal poverty level ($88,000 for a family of four) would get subsides on a sliding scale to help them buy coverage. Those with incomes closer to the poverty level would get bigger subsidies compared to those with higher incomes.
Medicaid, the joint federal-state health insurance program for low-income people, would be simplified and expanded to cover all individuals not eligible for Medicare with incomes up to 150 percent of the federal poverty level ($33,075 per year for a family of four). This expansion of Medicaid could eventually cover the 35,000 very low-income Minnesotans losing their General Assistance Medical Care (GAMC) due to Governor Pawlenty’s line-item veto and unallotment earlier this year. However, this expansion would not go into effect until 2013, so there could remain a gap in coverage.
The bill eliminates the existing gap in coverage for participants in the Medicare Part D prescription drug program (the “donut hole”) whereby enrollees continue to pay their premium but receive no benefit.
The House bill would also cap annual out-of-pocket costs, ban insurers from charging higher premiums to people with pre-existing medical conditions and prohibit insurers from charging older adults premiums that are more than twice as much as younger adults.
3. Provide adequate federal funding. According to the nonpartisan Congressional Budget Office (CBO), the House bill would cost just under $900 billion over 10 years but would not add to the federal budget deficit. In fact, the bill is expected to reduce the deficit over 10 years. The main financing provision in the bill is a progressive surtax of 5.4 percent on individuals with adjusted gross income more than $500,000 a year and couples with adjusted gross income more than $1 million a year.
We have argued that federal health care reform should not shift significant costs to the states. In the House bill, the full cost to expand Medicaid would be paid by the federal government in 2013 and 2014. After 2014, the federal government would pay 91 percent of the additional cost and states would pay 9 percent.
4. Contain unsustainable cost increases. The bill creates a National Insurance Exchange where individuals and small employers will be able to shop for coverage among competing private insurance plans. States would be permitted to opt out and create their own exchange if they meet certain federal requirements.
The House bill also includes a new public health insurance option to be developed by the Department of Health and Human Services. Under the public option, the federal government would negotiate reimbursement rates with health care providers. The public option would have to meet all of its costs from premiums collected.
The bill includes changes to Medicaid and Medicare designed to improve the quality of care, enhance efficiency and eliminate overpayments to private insurers under Medicare Advantage. Eliminating such overpayments along with other Medicare Advantage savings would lower Medicare spending by $170 billion over ten years, according to the Center on Budget and Policy Priorities.
Now the action moves to the Senate. The CBO is expected to deliver a “score” or price tag for the Senate health care bill later this week, after which the Senate may take up the bill on the floor. Expect the Senate debate to go on for several weeks, with many amendments. After the Senate completes its work, a House-Senate conference committee will work out differences between the House and Senate versions of the legislation.
While Majority Leader Harry Reid recently suggested that the Senate may not vote on its bill until early next year, President Obama reiterated that he hopes the Senate will vote soon and that a final House-Senate conference committee report can reach his desk before the end of the year.
If you want to dig deeper into the details, a helpful bill summary is available from the House committees who worked on the bill.