Health Care Reform: CBO Gives Thumbs Up on Baucus Plan, Comparison of the Proposals

After Senate Finance Chairman Max Baucus (D-MT) announced his health care bill, the Congressional Budget Office sent a letter to Baucus stating that the “bill would cost a total of $774 billion. Finance Committee thought the bill would cost $856 billion based on gross costs, while CBO used net costs. “The legislation would also reduce the deficit by $49 billion over 10 years,” according to the Wall Street Journal, and the deficits could be reduced longer.

The proposal would also provide health-insurance coverage to more people through subsidies and other means that would cost $500 billion in 10 years.

The legislation would be offset by revenue-raising provisions, such as a 35% excise tax on high-cost health insurance plans, as well as spending reductions. According to the “CBO cost estimate, the proposed excise tax on high-cost insurance plans would raise $215 billion over 10 years. Spending reductions would save $409 billion over the same period.

Below is summary of the comparison that Kaiser Family Foundation conducted on the Finance bill, the Senate HELP Committee, the tri-Committee House Proposal and the President’s plan.  For a complete detailed side by side analysis of the plan

Coverage

House: Around 94% of non-elderly residents and nearly half the 17 million non-elderly residents who remain uninsured would be illegal immigrants.

Finance Committee: would result in 94% of nonelderly people receiving insurance coverage by 2019, and would exclude illegal immigrants.

President’s Plan: coverage for all Americans

HELP Committee: 97% of Americans are covered 

Changes to Medicaid

House: The federal-state insurance program for the poor would be expanded starting in 2013 to cover all non-elderly individuals with incomes up to 133% of federal poverty line.

Finance Committee: Income eligibility levels standardized to 133% of the federal poverty line ($14,400 for an individual or $30,000 for a family of four). The expansion would be delayed until 2014.

President’s Plan: Nothing specific.

HELP Committee: Creates a new voluntary insurance program that would provide a modest daily cash benefit to help disabled people stay in their own homes instead of going into nursing homes.

Purchasing a Plan

House: Establishes the “Health Choices Administration,” to be led by a Health Choices Commissioner, which will establish and run a Health Insurance Exchange. 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 version that passed the Energy and Commerce Committee instead would let the HHS secretary negotiate rates with providers.

 

Finance Committee: Self-employed people and small businesses could pick a plan offered through new state-based purchasing pools. No changes for people working in larger companies. Establishment of State Exchanges. Requires states to establish an

individual market exchange and a Small Business Health Options Program (SHOP) exchange (or a combined exchange) in 2010.

 

President’s Plan: Small businesses and people without access to affordable insurance through their employer or elsewhere would have access to a new exchange starting in 2013. Illegal immigrants would not be able to shop in the exchange.

HELP Committee: Individuals and small businesses could purchase insurance through state-based purchasing pools called American Health Benefit Gateways.

Government Plan

House: A committee would recommend an "essential benefits package" including preventive services, mental health services, oral heath and vision for children; out-of pocket costs would be capped. The new benefit package would be the basic benefit package offered in the exchange and over time would become the minimum quality standard for employer plans.

Finance Committee: None. Would create nonprofit, member-owned co-ops to compete with private insurers.

President’s Plan: Supports a new public plan.

HELP Committee: A robust new public plan to compete with private insurers. The plan would be run by the government and negotiate payment rates with providers.

Benefits Package

House: 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.

Finance Committee: The government would set four benefit categories ranging from coverage of around 65% of medical costs to about 90%. No denial of coverage based on pre-existing conditions. All plans sold to individuals and small businesses would have to cover basic benefits, including primary care, hospitalization and prescription drugs.

President’s Plan: Wants to prevent insurers from denying coverage to people with pre-existing conditions; limit premium variation based on age; and stop insurers from dropping people when they get sick.

HELP Committee: Health plans must offer a package of essential benefits recommended by a new Medical Advisory Council. No denial of coverage based on pre-existing conditions.

Subsidies

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

Finance Committee: Tax credits for individuals and families making up to 300% of the federal poverty level, which computes to $66,150 for a family of four. Households up to 400% of poverty line could also get some relief. Tax credits for small employers.

President’s Plan: Supports sliding-scale subsidies for low-income people but hasn't specified at what income level they should be offered.

HELP Committee: Available up to 400% poverty level, or $88,000 for a family of four.

Requirements for Employers

House: Employers must provide insurance to their employees or pay a penalty of 8% of payroll. Companies with payroll under $250,000 annually are exempt. Employers could apply for a two-year exemption from the mandate if they can prove the requirements would result in job losses that would negatively affect their communities.

Finance Committee: Not required to offer coverage, but companies with more than 50 full-time workers would pay a fee if the government ends up subsidizing employees' coverage

President’s Plan: Businesses with more than 50 workers would be required to offer their workers coverage or pay a fee.

HELP Committee: Employers who don't offer coverage will pay a penalty of $750 a year for each full-time worker. Businesses with 25 or fewer workers are exempt.

Requirements for Individuals

All plans except the Republican outline require that all Americans must get coverage (individual mandate) or otherwise be penalized. 

Cost & Payment

House: About $1.5 trillion over 10 years paid by revenue-raisers including $544 billion over the next decade from new income taxes on single people making more than $280,000 a year and couples making more than $350,000; $37 billion in business tax increases; about $500 billion in cuts to Medicare and Medicaid; sizable penalties paid by individuals and employers who don't obtain coverage.

Finance Committee: $856 billion over 10 years paid by fees on insurance companies, drug makers, medical device manufacturers and insurers. Tax of 35% on premiums on plans costing more than $8,000 for individuals ($21,000 for families.) Cuts to Medicare and Medicaid. Fee on employers whose workers receive government subsidies. Fines on individuals who fail to get coverage.

President’s Plan: $900 billion over 10 years paid by taxing high-value insurance plans cuts to Medicare.

HELP Committee: Senate Finance Committee determines

The Positive CBO analysis is a huge boost to the Baucus Senate Finance Committee Plan.  Let’s face it American’s were not enamored by the House version which promised a trillion + in deficit spending, public option and employer mandates.

The next two weeks are critical in the healthcare reform debate.  All parties (house, senate and executive) will be watching closely the markup sessions on the Baucus plan taking place in the next couple of weeks.