Details on Health Care Bills in House, Senate

(WASHINGTON) — House Democratic leaders are offering a $1.2 trillion, 10-year health overhaul bill that expands coverage to millions of Americans. House Republicans have unveiled their alternative, after months of criticizing the Democrats' approach.

In the Senate, Majority Leader Harry Reid, D-Nev., is finalizing legislation merging the work of two committees and making other changes. (See 10 players in health-care reform.)

Here are details on the three bills. The Senate bill has not yet been made public, so some specifics are unknown. (Read "The Year in Medicine 2008: From A to Z.")

The House Democratic bill (Affordable Health Care for America Act):

WHO'S COVERED: About 96% of legal residents under age 65 — compared with 83% now. About one-third of the remaining 18 million people under age 65 left uninsured would be illegal immigrants.

COST: The Congressional Budget Office says the bill's cost of expanding insurance coverage over 10 years is $1.055 trillion. The net cost is $894 billion, factoring in penalties on individuals and employers who don't comply with new requirements. That's under President Barack Obama's $900 billion goal. However those figures leave out a variety of new costs in the bill including increased prescription drug coverage for seniors under Medicare, so the measure may be around $1.2 trillion.

HOW IT'S PAID FOR: $460 billion over the next decade from new income taxes on single people making more than $500,000 a year and couples making more than $1 million. The original House bill taxed individuals making $280,000 a year and couples making more than $350,000, but the threshold was increased in response to lawmakers' concerns that the taxes would hit too many people and small businesses.

There are also more than $400 billion in cuts to Medicare and Medicaid; a new $20 billion fee on medical device makers; $13 billion from limiting contributions to flexible spending accounts; sizable penalties paid by individuals and employers who don't obtain coverage; and a mix of other corporate taxes and fees.

REQUIREMENTS FOR INDIVIDUALS: Individuals must have insurance, enforced through a tax penalty of 2.5% of income. People can apply for hardship waivers if coverage is unaffordable.

REQUIREMENTS FOR EMPLOYERS: Employers must provide insurance to their employees or pay a penalty of 8% of payroll. Companies with payrolls under $500,000 annually are exempt — a change from the original $250,000 level to accommodate concerns of moderate Democrats — and the penalty is phased in for companies with payrolls between $500,000 and $750,000.

Small businesses — those with 10 or fewer workers — get tax credits to help them provide coverage.

SUBSIDIES: Individuals and families with annual income up to 400% of poverty level, or $88,000 for a family of four, would get sliding-scale subsidies to help them buy coverage. The subsidies would begin in 2013.

HOW YOU CHOOSE YOUR HEALTH INSURANCE: Beginning in 2013 through a new Health Insurance Exchange open to individuals and, initially, small employers; it could be expanded to large employers over time. States could opt to operate their own exchanges in place of the national exchange if they follow federal rules.

BENEFITS PACKAGE: A committee would recommend a so-called essential benefits package including preventive services; out-of pocket costs would be capped. The new benefit package would be the basic benefit package offered in the exchange.

INSURANCE INDUSTRY RESTRICTIONS: No denial of coverage based on pre-existing conditions. No higher premiums allowed for pre-existing conditions or gender. Limits on higher premiums based on age.

GOVERNMENT-RUN PLAN: A new public plan available through the insurance exchanges would be set up and run by the secretary of Health and Human Services. Democrats originally designed the plan to pay Medicare rates plus 5% to doctors, but the final version — preferred by moderate lawmakers — instead would let the HHS secretary negotiate rates with providers.

CHANGES TO MEDICAID: The federal-state insurance program for the poor would be expanded to cover all individuals under age 65 with incomes up to 150% of the federal poverty level, which is $33,075 per year for a family of four. The federal government would pick up the full cost of the expansion in 2013 and 2014; thereafter the federal government would pay 91% and states would pay 9%.

DRUGS: Grants 12 years of market protection to high-tech drugs used to combat cancer, Parkinson's and other deadly diseases. Phases out the gap in Medicare prescription drug coverage by 2019. Requires the HHS secretary to negotiate drug prices on behalf of Medicare beneficiaries.

ANTITRUST: Would strip the health insurance industry of a long-standing exemption from antitrust laws covering market allocation, price fixing and bid rigging. The bill also would give the Federal Trade Commission authority to look into the health insurance industry at its own initiative.

See 10 players in health-care reform.

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