Hallelujah! Senate Majority Leader Reid (D-NV) has released the "Patient Protection and Affordable Health Care Act" – his melding of the health care reform bills that had been approved by the Senate Finance Committee and the Senate HELP Committee. In addition, the Congressional Budget Office has released its estimate of the effect of the bill on the federal budget. Details below.
First of all, this is a massive bill. It is over 2000 pages long – the table of contents alone is 13 pages long. It is going to take some time to cover all of the changes that this bill will make to the system of medical care and how we pay for it. Today's posting is only a start.
Second, the Reid bill contains some substantial differences from the Baucus bill and the Kennedy bill that had been approved by Senate Committees and from the Pelosi bill that was approved by the House of Representatives. Unlike the Baucus bill, the Reid bill contains a public option, which it calls the "Community Health Insurance Option." Unlike the House bill, the Reid bill provides that the states may choose not to offer the public option – the "opt out" provision. In addition, unlike any of the other bills the Reid bill would raise money to pay for additional coverage by increasing the Medicare tax by one-half of one percent on individuals earning more than $200,000 per year and couples earning more than $250,000. The House bill would raise the income tax on persons earning more than $500,000 per year and couples earning more than $1,000,000. The Baucus bill had relied primarily upon a tax on expensive health care plans.
Here is the CBO's comparison of the Reid bill to the Baucus bill:
[Under the Reid bill] The subsidies that would be provided through the insurance exchanges are larger, and there are provisions regarding a public plan that could be offered in the exchanges.
The penalties for individuals who do not obtain insurance are phased in more quickly and the exemptions from those penalties are less extensive. The penalties for employers whose workers receive exchange subsidies also differ.
The start dates for the individual mandate, exchanges, and employer penalties were all moved from July 1, 2013, to January 1, 2014.
This legislation contains a number of additional provisions, including those establishing the CLASS program and an abbreviated approval pathway for follow-on biologics, and providing increased funding for prevention and public health.
The thresholds for the excise tax on high-premium insurance plans are higher, and there is a new provision for an additional payroll tax on high-income individuals.
Despite the differences, the main outline of the Reid bill is the same as that of the other health care reform bills. The legislation will create a marketplace called the Exchange through which individuals and employers may purchase insurance. Individuals will be required to obtain health insurance, and employers may either provide insurance or pay a fee. The federal government will grant subsidies to low-income individuals and to small employers for the purchase of health insurance. Medicaid will be expanded and the federal government will pay for the expansion. Coverage may not be denied or made more expensive on account of preexisting conditions. Annual co-pays and deductibles are limited, and lifetime limits on coverage are abolished. The may be no co-pays or deductibles for preventive care.
According to the CBO, the Reid bill will reduce the number of uninsured people by 31 million – that is, 31 million more people will have health insurance as a result of this legislation. The CBO states that
under the legislation, the share of legal nonelderly residents with insurance coverage would rise from about 83 percent currently to about 94 percent.
The CBO also estimates that the public option contained in the Reid bill pay for itself. Each year, the premiums that people will pay for insurance under the Community Health Insurance Option is larger than the federal outlay.
The key sentence in the CBO document relates to the effect of this bill on the federal deficit. The CBO states that:
enacting the Patient Protection and Affordable Care Act would result in a net reduction in federal budget deficits of $130 billion over the 2010–2019 period.
Erica Werner and Ricardo Alonso-Zaldivar of the Huffington Post have posted an article comparing the Senate and House bills. Here is a link to the Kaiser Foundation's description of the House bill (H.R. 3962), and here again are links to the Reid bill and the CBO estimate. In future postings I will examine specific aspects of the Senate bill and the CBO's cost estimates.
Visit Professor Huhn's website on health care financing reform for links to information about proposed legislation, studies and reports, public agencies, and private organizations concerned with this issue.
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There's some major sleight of hand being used to come up with the numbers for health care reform. The taxes kick in 4 years before the benefits kick in. Once the benefits kick in starting in 2014, the real cost of the Senat bill isn't $849 billion, it's two to three times that much, and 10 years out from there, the bill will actually add to the deficit, unless more taxes are added in addition to the 14 or so new taxes that are already included in the Senate bill. Also, all the Medicare cuts depend on Congress making them every year, and Congress has never shown a willingness to make those cuts before. Bush was crucified by the Democrats when he tried to make much smaller cuts.
The current bills also raise the cost of health care instead of lowering it, another negative. I'm for health care reform, be we could have done a heck of a lot better than the monstrous bureaucratic mess this Congress has developed.
What they've created is a mandate to force people to buy health insurance, plus a giant welfare program on top. The actually problem with rising health care costs remains. We've just made it bigger.