Some may see it as the beginning of a new debate, but on Wednesday night Senate Majority Leader Harry Reid (D-NV) likened the introduction of the long-awaited Senate healthcare reform bill as the "last leg of this journey that we've been on now for some time." The new 2,074-page bill, according to the Congressional Budget Office (CBO), has an anticipated cost of $849 billion over the next 10 years, and will provide coverage for an additional 30 million people.
Reid, who was joined by several key senators involved in the completion of the bill, cited the 750,000 Americans in the past year who filed for bankruptcy.
"Over half of those bankruptcies dealt with healthcare costs. More than half the people filed bankruptcy because of healthcare costs had insurance. So, not only do we make it more affordable for every American, but we certainly do it in a fiscally sound responsible way," he said.
However, that idea will be largely debated by Republicans when the Democrats take the bill to the floor either Friday or Saturday for a vote to begin debate. Whether the Democrats will have the needed 60 votes to stop a Republican filibuster remains to be seen. If the bill advances, amendments most likely will not be considered until Nov. 30—when the Senate returns from the Thanksgiving break.
As anticipated, the bill—called the Patient Protection and Affordable Care Act—includes a public insurance option that would permit states to opt out at their request. In its analysis, CBO estimated that one in eight individuals purchasing coverage through health exchanges in the states would select the public option—for a total of about 3 million to 4 million people.
CBO noted that a public plan paying negotiated rates would attract a "broad network of providers but would typically have premiums that were somewhat higher than the average premiums for the private plans in the exchanges." In terms of determining which states would opt out, CBO anticipated that about two-third of the population would be expected to have a public option in their states. (The House bill's public option does not use an opt-out provision.)
Like the House bill (HR 3962), policies purchased through the state exchanges—or directly from insurers—would have to meet several requirements: Insurers would have to accept all applicants, could not limit coverage for pre-existing medical conditions, and could not vary premiums to reflect differences in enrollees' health.
According to CBO, enacting the bill would create a net reduction in federal budget deficits of $130 billion over the next decade. The CBO estimate also includes a projected net cost of $599 billion over the 10-year period for the proposed expansions in insurance coverage though the exchanges, increased outlays for Medicaid and the Children's Health Insurance Program, and tax credits for small employers.
To pay for this coverage, the bill includes a variety of tax increases and new fees, including:
- The Medicare payroll tax for individuals earning $200,000 annually and couples earning $250,000 annually would rise by half a percentage point—from the current 1.45% to 1.95%.
- Insurers providing costlier health coverage—often referred to as "Cadillac" plans—would see a 40% tax on policies worth more than $8,500 for individuals and $23,000 for families. This had been proposed in the initial Senate Finance Committee bill.
Like the Senate Finance bill (and unlike the House bill), the new Senate bill does not mandate that all employers offer healthcare coverage. However, businesses with more than 50 employees—where at least one qualifies for government subsidies—would face a penalty of $750 for every full time worker if it declines to provide that coverage.
Starting in 2014, most nonelderly people with incomes below 133% percent of the federal poverty level (this was 150% in the House bill) would be eligible for Medicaid. The federal government would pay all of the costs of covering these newly eligible enrollees through 2016. In subsequent years, the share of federal spending would vary somewhat from year to year, according to CBO, but ultimately would average about 90%.
For altering spending with various Medicare and Medicaid programs, CBO estimated that $491 billion could be saved over the next decade by:
- Enacting permanent reductions in the annual updates to Medicare payment rates for most services in the fee for service sector (other than physicians' services). This would yield savings of $192 billion over 10 years.
- Setting payment rates in the Medicare Advantage program on the basis of the average of the bids submitted by Medicare Advantage plans in each market. This would provide savings of an estimated $118 billion.
- Reducing Medicaid and Medicare payments to disproportionate share hospitals that serve a large number of low income patients. This would provide saving of about $22 billion from Medicaid and $21 billion from Medicare.