UBP blog

11/24/2009

House health reform bill vs. Senate bill: what’s the same and what’s different

As many of you know, the health care reform bill just recently passed in the House of Representatives, but it still needs to pass through the Senate.

This next step could prove to be very difficult as the Senate and House only agree on a few things.

Among these are:

  • A pay or play mandate for individuals: The House bill, the Senate HELP Committee bill and the Senate Finance Committee bill all require individuals to pay an annual penalty if they do not have qualifying health insurance coverage.
  • Affordability credits to lower income individuals:These credits range from 10% of the individual’s adjusted gross income (AGI) for the Senate Finance Committee bill up to 12.5% of the individual’s AGI in the Senate HELP Committee bill.
  • Expanding Medicaid by way of lowering the threshold for eligibility

Beyond these three items, there isn’t much else that the House and Senate agree on. Below are three major points of difference between the two bills.

  1. Public Option: The House bill includes a public insurance option—a government-run plan that is intended to compete with private insurers’ plans. The Senate, however, is still in the process of combining two proposals from the Finance and HELP Committees into a final bill. This final bill is expected to include the public option as well but individual states may be able to opt out of it.
  2. Cost: The House’s bill is expected to cost $1.1 trillion over the course of 10 years (which is higher than the dollar amount at which President Obama hopes to cap health care reform–$900 billion). If the cost of the Senate bill comes out to $900 billion or less, it may have a better chance of passing as the final health care reform law than the House’s bill.
  3. How the reform will be funded: To pay for all of this health care reform, the House bill will impose a 5.4% income surcharge on individuals with an AGI that exceeds $500,000 and couples with an AGI exceeding $1 million. The Senate Finance committee, however, wants to do something entirely different.

What they’ve proposed is an excise tax on high-end health plans (or so-called “Cadillac Plans”) as well a $13 billion annual tax on health insurers, and manufacturers of both pharmaceuticals and medical devices.

The Senate Finance Committee’s proposed excise tax on “Cadillac Plans” will be a 40% tax on plans with a value above: 

  • $8,000 per-year for individual coverage ($9,850 for retirees and high-risk industries)
  • $21,000 per-year for family coverage  ($26,000 for retirees and high-risk industries)

These amounts will be indexed for inflation at the CPI-U (Consumer Price Index for all urban consumers) +1%. However, in areas where the cost of living is high, considerably more plans will be taxed (even in the first year the law is implemented). Employers are already moving to more consumer-driven plans to curb healthcare costs.

Could a 40% excise tax on “Cadillac” benefits on top of a double digit rate renewal push even more employers towards high deductible plans? If so, employers will need to clearly communicate to employees how deductible plans work and also make them more aware of their healthcare spending.

To help employees out with the sticker shock of deductibles, employers may also want to consider adding tax saving instruments such as HRAs or voluntary benefits such as accident plans to help employees with high and unexpected expenses subject to their deductibles.

We’d love to discuss some of these options with you to help you figure out the plan design that will work best for your employees. So contact us via our website or call us at 617-859-1777 to get the conversation going.

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07/28/2009

What the new healthcare reform bill means for you and your employees

Filed under: health care reform legislation — ubpblogger @ 2:07 pm
Tags: ,

On July 14th, The House of Representatives introduced America’s Affordable Health Choices Act of 2009 (HR 3200).

Legislators say that the bill will do these 2 things:

1.    Make quality, affordable health care accessible to all Americans

2.    Curb health care cost growth

If America’s Affordable Health Choices Act of 2009 is passed into law, here are a few things that would happen:

  • All Americans would be required to have health insurance or pay a penalty.
  • All businesses (except for those with annual payrolls of $40,000 or less) would be required to offer health insurance coverage to employees or pay a fee*.
  • Medicaid would be expanded to cover more of our nation’s poor.
  • New exchanges would be created for Americans to purchase insurance with the assistance of government subsidies.
  • A public plan option would be established.

This Act has an expected price tag of $1 trillion over the next 10 years; here’s how it will be paid for.

  • Reduced Medicare spending
  • Graduated income tax on the wealthiest Americans (Individuals with adjusted gross incomes of over $280,000 per-year and families making more than $350,000 per-year)

Opposition to the act:

The Congressional Budget Office (CBO) estimates that this Act will extend coverage to 37 million uninsured Americans by 2019. However, there’s still quite a healthy amount of opposition out there to this bill.

The National Federation of Independent Businesses spoke out against the bill—and its public insurance option—saying that it:

“threatens the viability of our nation’s job creators … destroys choice and competition for private insurance and fails to address the core challenge facing small business — cost.”

On the other side of the issue, President Obama advocated for a public insurance option stating that it would:

“make health care more affordable by increasing competition, providing more choices and keeping insurance companies honest.”

So, what do the people think?

Support for the bill among the general public is less than unanimous. 

A recent study conducted by Zogby International in conjunction with the University of Texas Health Science Center at Houston shows just 40% of voters are for it. Also, a national survey conducted in July by Rasmussen Reports revealed that only 35% of Americans support a government health insurance plan to compete with private insurers.

Are you for or against having a public plan compete against private insurers? Why?

Also, what are your thoughts on essentially taking Massachusetts’ mandate for businesses to offer insurance to employees nationwide?

*In the Senate HELP Committee’s proposal, employers would need to contribute at a minimum 60 percent to employee premiums or pay $725 for each full time employee and $325 for each part-time employee. The House of Representatives’ proposal would require employers to pay 72.5 percent of premiums for individual coverage and 65 percent for family coverage. The fee for noncompliance with this would equal 8 percent of payroll.

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