OK, so health care is on the horizon. There is lots of info out there, but I found this summary – no spin toward either side – just the facts. I thought it might be helpful….
HR 4872 would modify the Senate-passed health care bill (HR 3590). It would increase federal subsidies to help low- and moderate-income families buy coverage through health insurance exchanges, phase out the coverage gap for Medicare prescription drug enrollees and adjust the federal matching funds for Medicaid. The bill also would make the federal government the sole originator of federal student loans and direct the savings generated to education programs, including Pell grants.
The following reflects the substitute reconciliation bill released by Democratic leaders:
HEALTH CARE PROVISIONS The measure would increase subsidies that would be provided to low- and moderate-income households to buy insurance coverage through new insurance exchanges. It would increase penalties levied on employers that do not offer health benefits and phase out the current coverage gap in the Medicare prescription drug benefit.
Individual Mandate – The bill would change the tax penalty that would be required for individuals or families who are required to obtain health insurance under the individual mandate created by the Senate health care bill, but who do not do so. First, it would phase-in a flat penalty tax on households of $695 per household member, per year, by 2016. (The Senate-passed bill would impose a flat penalty of $750 per household member per year.) Second, it would increase the maximum penalty to 2.5 percent of household income, compared to 2 percent of household income in the Senate-passed bill.
Employer Requirements – The measure would set penalties for employers that hav employees who obtain subsidies to obtain health insurance through the new exchanges. The bill would specify that employers with more than 50 employees who offer health benefits would face a penalty of either $3,000 for each employee (full-time or part-time) who receives a subsidy, or $750 per full-time employee, whichever would be less. To calculate that fine, the bill would subtract 30 employees from the actual number of people employed at a firm. For instance, a firm with 51 full-time employees in which any employee receives subsidies, would pay a fine of $750 for 21, rather than 51, employees. It further specifies that employers who do not offer health insurance to employees would face a fine of $2,000 for each full-time employee who receives a subsidy to purchase insurance through an exchange.
Premium Tax Credits – The bill would set premium tax credits that would be available for households with annual incomes of between 100 percent and 400 percent of the federal poverty level to purchase health insurance through the new exchanges. Currently, this income range would cover annual incomes of between $22,050 and $88,200 for a family of four. The measure would limit the amount that certain households would have to contribute to their health insurance premiums. Within each income bracket, the bill stipulates that premium tax credits would be determined on a sliding scale with the credit limiting the premiums families would have to pay to a percentage of their income as follows:
Households with incomes of 133 percent up to 150 percent of the federal poverty level would pay between 3 percent and 4 percent of their income for premiums.
Those between 150 percent up to 200 percent of the federal poverty level would pay between 4 percent and 6.3 percent of their income.
Those between 200 percent up to 250 percent of the federal poverty level would pay between 6.3 percent and 8.05 percent of their income.
Those between 250 percent up to 300 percent of the federal poverty level would pay between 8.05 percent and 9.5 percent of their income.
Those with income of 300 percent up to 400 percent of the federal poverty level would pay 9.5 percent of their income for premiums.
The bill stipulates that, starting in 2015, the premium tax credits would have to be adjusted to reflect year-to-year premium growth in the health plans.
The bill also would modify the definition of modified gross income that would be used when determining eligibility for subsidies to exclude employer-sponsored health coverage for children up to age 26 from modified gross income.
Limits on Out-of-Pocket Costs – In addition, the bill would alter the percentage of actuarial benefits of a health plan that lower-income households would be required to pay out-of-pocket when purchasing health coverage through the new exchanges. It stipulates that households with incomes between 100 percent and 150 percent of the federal poverty level would have to pay no more 6 percent of the plan’s costs from out-of-pocket funds. Households with income between 150 percent and 200 percent of the federal poverty level would have to pay no more than 13 percent of a plan’s costs out-of-pocket. Households with income between 200 percent and 250 percent of the federal poverty level would pay no more than 27 percent of the plan’s costs out-of-pocket, and those with income between 250 percent and 400 percent of federal poverty level would pay no more than 30 percent of the plan’s cost out-of-pocket.
Health Insurance Reform Implementation Fund - The bill also includes a provision that would appropriate $1 billion to the Health and Human Services (HHS) Department for the administrative costs of implementing the Senate-passed health overhaul bill (HR 3590), and amendments to that measure made by HR 4872.
Medicare Advantage Payments Medicare Part C — better known as Medicare Advantage (MA) — is an alternative to traditional Medicare under which Medicare-eligible individuals are insured by private firms, rather than the federal government. The program was designated MA under the 2003 prescription drug law (PL 108-173) which replaced the “Medicare+Choice” program with MA. The private plans receive a per-person amount to cover certain benefits. Premiums for Medicare B coverage are paid to Medicare, but additional amounts may be paid to the MA provider.
The bill would freeze MA payments in 2011 and then re-formulate payments according to local costs. Under the new formula, which would be phased-in, MA payments would be allocated based on geographic variability of Medicare spending. MA payments would be 95 percent of traditional fee-for-service Medicare payments in areas that are in the top quartile of Medicare spending. MA payments would be 100 percent of traditional fee-for-service payments in the second-highest quartile of spending. MA payments would be 107.5 percent of fee-for-service payments in areas in the third-highest quartile of spending. MA payments would be 115 percent of fee-for-service payments for areas in the lowest quartile of spending. In addition, the measure would limit the amount that MA plans could spend on administrative costs to 15 percent. If a plan spent more than 15 percent of the amount collected from premiums on administrative costs, it would have to pay HHS a fine that would be equal to the amount of funds spent on administrative costs that exceeded 15 percent.
Prescription Drug ‘Doughnut Hole’ - Under the 2003 law that created Part D, after a beneficiary meets his or her deductible for the year, a beneficiary will have 75 percent of his or her drug costs covered by the government up until a set dollar amount, which was initially set at $2,250, but has increased to $2,830 in 2010 as a result of inflationary increases permitted beginning in 2007. After that dollar amount has been reached, the beneficiary is responsible for 100 percent of the cost of prescriptions up to another dollar amount, known as the catastrophic threshold, or the “doughnut hole,” which is $6,440 in 2010. The federal government is responsible for 95 percent of the costs above that upper limit for the rest of the year.
The measure would provide a one-time, $250 rebate for beneficiaries who fall into the “doughnut hole” in 2010. It would phase out the “doughnut hole” over 10 years. Starting in 2011, the measure would create a discount of 50 percent on brand-name drugs for beneficiaries who fall into the “doughnut hole,” and this discount would increase to 75 percent by 2020, with the government paying the rest of the cost of the drugs.
‘Market Basket Updates’ – The measure would make several changes to the market basket updates used to determine the reimbursement for certain services under Medicare Part A. Generally, market baskets are used to adjust payments each year based on projected changes in indexes that are used to measure how much more or less it would cost to buy the same goods and services.
The measure would incorporate “productivity adjustments” —adjustments based on gains in productivity — into several market baskets used under Part A that do not currently incorporate such provisions. The adjustments would be phased in during different years for different types of providers, and would affect inpatient hospitals, long-term care hospitals, inpatient rehabilitation facilities, psychiatric hospitals, and outpatient hospitals.
Medicare DSH Payments - Medicare disproportionate share hospital (DSH) payments are provided to hospitals that treat a disproportionate share of low-income patients. The bill would require a $3 billion decrease in DSH payments over the period of 2014 through 2019.
Other Provisions – The bill would give additional Medicare reimbursements in 2010 to physicians with practice costs that are lower than average, and would create a $400 million fund for extra Medicare payments in 2011 and 2012 to hospitals in counties ranking in the lowest quartile of per capita Medicare spending. The measure also would lower a new tax that the bill would assess on medical device manufacturers, but it would broaden the reach of the tax. The tax rate would be reduced to 2.3 percent of the price of a device, down from 2.9 percent. But the tax would apply to so-called “Class 1” devices – simple products like bedpans and tongue depressors.
Federal Matching Funds for States – HR 4872 specifies that in all states, the federal government would cover 100 percent of the cost of coverage to newly eligible people — including both parents and childless adults — from 2014 through 2016. In 2017, federal matching funds for all states would cover 95 percent of the costs for the newly eligible people, and the rate would be 94 percent in 2018, 93 percent in 2019, and 90 percent in 2020 and later years. The measure also would reduce the state portion of the costs of covering childless adults for states that have previously provided such coverage to individuals at 100 percent of the federal poverty level or greater. This provision would ensure that a state that previously provided coverage to childless adults who continue to be enrolled in Medicaid would receive the same federal funding as a state that did not previously provide such coverage.
Medicaid DSH Payments – The measure would require a reduction in federal matching payments to states for Medicaid DSH payments, which are additional reimbursements for hospitals that serve a disproportionate share of low-income individuals. Specifically, the measure would require a reduction in DSH payments by $14.1 billion, over the period of fiscal 2014 through fiscal 2019. The bill also specifies that Tennessee — which does not receive Medicaid DSH payments because of the way it has structured its Medicaid program — would receive $47.2 million in payments in fiscal 2012 and $53.1 million in fiscal 2013.
Medicaid Funding for Territories – The bill would provide additional federal Medicaid funding for the U.S. territories. It would appropriate an increase of $1 billion for federal matching payments for Medicaid programs in the five U.S. territories over the period of fiscal 2014 through fiscal 2019, which would be in addition to the amount provided by the Senate bill, and it specifies that $925 million of that amount would go to Puerto Rico. It also would increase the caps on federal funding in the territories.
Physician-Owned Hospitals – Current law (known as the “Stark law”) prohibits physicians from referring Medicare or Medicaid patients for certain health services to hospitals in which the physicians have a direct financial interest. Such financial interests include ownership or investment, or compensation agreements. The Stark law includes certain exceptions from this ban on so-called self-referrals — it allows physicians to refer these patients to hospitals in which they have a financial interest if the referring physician is authorized to perform medical services at the hospital, or if the financial interest of the referring physician is in the whole hospital, rather than a specific part or department.
The measure would delay, until Dec. 31, 2010, the implementation of the new rules concerning the “whole hospital” exception. It also would create an exception to the rules, through which physician-owned hospitals with a high proportion of Medicaid patients would be able to expand their capacity, but places limits on such expansion.
Insurance Regulations – The measure would delay implementation of a provision stipulating that health insurers could rescind group or individual coverage only with clear and convincing evidence of fraud or intentional misrepresentation by an enrollee — taking effect six months after enactment, instead of immediately upon enactment. It also would delay, until six months after enactment, a provision to require insurance plans to allow parents to continue coverage for dependent children who would otherwise not have health insurance until a child reaches his or her 26th birthday, and a provision that prohibits insurers from setting lifetime limits on the dollar value of health care until six months after enactment. The bill would bar health plans from setting any annual limits on the dollar value of health care provided, effective six months after enactment.
Community Health Centers - The measure would increase the amount appropriated for community health centers. It would appropriate $1 billion in fiscal 2011, $1.2 billion in fiscal 2012, $1.5 billion in fiscal 2013, $2.2 billion in fiscal 2014, and $3.6 billion in fiscal 2015.
Fraud in Public Programs – The bill would appropriate $95 million in fiscal 2011, $55 million in fiscal 2012, $30 million in each of fiscal 2013 and 2014, and $20 million in each of fiscal 2015 and 2016 for the Health Care Fraud and Abuse Control Fund, which would be used to combat fraud in Medicaid programs.
Tax on High-Cost Health Plans – The bill substantially would scale back a provision in the Senate health care bill that would impose an excise tax on high-cost health plans referred to as Cadillac plans by delaying the effective date of the tax and by increasing the threshold at which the tax would apply. It would delay the tax from taking effect until 2018, rather than in 2013, and increase the threshold at which the tax would apply to $10,200 for individual coverage and $27,500 for family coverage
Medicare Payroll Tax for Investment Income – This bill would increase the Medicare hospital payroll tax and also apply a new Medicare payroll tax on investment income. The measure imposes a 3.8 percent tax on either a household’s net investment income, or the amount of modified adjusted gross income that exceeds $200,000 for an individual or $250,000 for a couple, whichever is less. It also would apply the increased tax not only to earned income, but also to investment income, including estate and trust income, dividends, interest, royalties or rents.
Flexible Spending Account Limits – Flexible Spending Accounts (FSAs) are offered by employers and permit employees to deposit pre-tax amounts into an account to cover out-of-pocket payments for qualifying medical expenses such as prescription drug co-payments, co-payments for office visits and over-the-counter medicines. There is currently no limit to the amount that someone can deposit into an FSA, although employers may set up a cap, and most do. The measure would limit annual contributions to FSAs to $2,500, starting in 2013.
Industry Fees & Taxes
Fees for Health Insurers – The bill would delay industry fees for health insurers until 2014. It also would increase the annual flat fee that would be levied on the insurance industry to $8 billion in 2014, $11.3 billion in 2015 and 2016, $13.9 billion in 2017, and $14.3 billion in 2018. In 2019, these fees would be adjusted by the same rate as the growth in health insurance premiums.
Taxes for Medical Device Makers – The bill would create a 2.3 percent tax on the sale of any taxable medical device by a manufacturer or importer of such a device, rather than imposing a flat fee on the industry. It specifies that the tax would not apply to eyeglasses, contact lenses, hearing aids, or any other medical device that is determined by FDA to be an item that “is generally purchased by the general public at retail for individual use.” Under the bill, the tax would take effect on 2013.
Biofuel Tax Credit – The 2008 farm law (PL 110-246) created a $1.01-per-gallon credit for the production of biofuels from cellulosic feedstocks, which was designed to encourage production of biofuels that are not derived from feedstocks. There are concerns that since its creation, some taxpayers have been trying to obtain the credit for non-processed fuels, including “black liquor,” which is a byproduct from paper manufacturing. The bill would modify the rules of the credit to preclude black liquor from eligibility and ensure that the tax credit could only be used for fuels that could be used in a car engine or to heat buildings. Specifically, it would excludes any fuel if more than 4 percent of the fuel, determined by weight, is a combination of water or sediment, or if the ash content of the fuel is more than 1 percent as determined by weight. The new rules would take effect for fuels sold or used on or after Jan. 1, 2010.
The measure would shift all new federal student lending to the Direct Loan program, beginning in July 2010, effectively ending the Federal Family Education Loans program. Under the bill, private lenders would be allowed to continue servicing student loans. Under a competitive bidding process, the Education Department would select lenders based on certain criteria.
CBO estimated that the changes to the federal student loan program would produce savings of $61 billion over 10 years. The measure directs that $10 billion of that savings would go toward deficit reduction, and $9 billion would offset the costs of the health care overhaul.
The remaining $42 billion would be spent on education programs, including an increase in the maximum Pell grant from $5,550 in 2010 to $5,975 in 2017. It also would provide $2.6 billion through fiscal 2019 for minority-serving institutions, $500 million annually in fiscal 2010 through fiscal 2014 for community college programs, and $750 million for a college access programs. It also modifies the terms of a student loan repayment program. The bill would make changes to the federal student loan program and provide funding for other education programs.
The measure would shift all new federal student lending to the Direct Loan Program, beginning July 1, 2010, effectively ending the Federal Family Education Loans (FFEL) program. Under the bill, private lenders would be allowed to continue servicing student loans. Under a competitive bidding process, the Education Department would select lenders based on how well they serve borrowers, educate them financially, and prevent loan defaults. The bill would increase the maximum annual Pell Grant scholarship from $5,550 in 2010 to $5,975 in 2017, provide $2.6 billion for minority-serving institutions, provide $500 million annually from fiscal 2010 through fiscal 2014 for community colleges, and provide $750 million for a college access program. This also would modify the terms of the income-based student loan repayment program.
Termination of Private Lending Program – The bill would terminate the authority to make or insure any additional loans in the Federal Family Education Loan and insurance programs after June 30, 2010, thus shifting all new federal student lending to the Direct Loan Program. As a result, the federal government would originate all student loans, while private lenders would still be permitted to continue servicing government-issued loans.
Increasing Pell Grants – The bill would increase the maximum annual Pell Grant scholarship from $5,550 in 2010, to $5,975 in 2017. The measure also would make future funding for Pell Grants mandatory and tie annual increases to changes in the Consumer Price Index. The mandatory component of the funding would be determined by inflating the previous year’s total and subtracting the maximum award provided for in the appropriations law for the previous year, or $4,860, whichever is greater. Beginning in the 2018-2019 academic year, the maximum Pell award would remain at the 2017-2018 level. The measure would provide $13.5 billion in mandatory appropriations for the federal Pell Grant program.
Student Loan Repayment Changes – The measure would amend the Income-Based Repayment program to cap student loan payments for new borrowers after July 1, 2014, at 10 percent of adjusted income, rather than 15 percent. It also would to forgive remaining balances after 20 years of repayment, rather than the 25 years currently allowed.