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Senate Health Bill Strives To Balance Many Interests

In one of the most anticipated events in the health reform debate, Majority Leader Harry Reid, D-Nev., tonight released the bill expected to go to the Senate floor. Reid added new taxes and modified major provisions of health bills passed by two Senate panels in his quest to meet President Barack Obama's target of health legislation that would cost less than $900 billion and win 60 votes in the Senate.

Reid's bill would delay for one year, from 2013 to 2014, provisions dealing with subsidies, creation of health insurance "exchanges" and an expansion of the Medicaid program to 133 percent of the federal poverty level.

As expected, Reid included a provision in the bill that would allow states to opt-out of a government-run public health insurance plan though states would have to pass legislation to do so. Abortion could be covered under the public plan but only if the secretary of Health and Human Services could certify that no taxpayer funds would be used, according to Senate Democratic aides.

"There will be a strict firewall between federal funding and abortions," said Sen. Barbara Boxer, D-Calif.

Starting in 2014, most Americans would be required to have health insurance or face financial penalties of $95 that year, growing to $750 by 2016. While employers would not be required to provide health insurance to workers, firms with 50 or more employees which did not provide health insurance would pay a penalty if workers received government subsidies to purchase coverage through the exchange.

The bill, estimated to cost $849 billion over the next decade, would also place a 5 percent excise tax on elective cosmetic surgery, which would raise more than $5 billion in the next 10 years. Another revenue-raiser is an increase in Medicare payroll taxes - from 1.45 to 1.95 percent - on individuals earning $200,000 a year and couples earning $250,000. The tax would raise about $54 billion in revenue over the next decade, aides said.

High-cost health insurance plans - with yearly premiums of $8,500 for individuals and $23,000 for families - would be subject to a 40 percent excise tax, a provision that many analysts have said would help reduce health care costs. Reid increased those thresholds from those in the Senate Finance Committee bill to appease some lawmakers and unions who have opposed the provision, saying that it would hurt workers who have received more generous health benefits in exchange for foregoing salary increases.

Children now enrolled in the Children's Health Insurance Program (CHIP) would remain in the program and not be moved into the health insurance exchanges for coverage.

Beginning in 2010 insurers could not cancel health insurance policies once people become ill – a practice known as rescissions. Insurers could not have lifetime or annual limits on coverage and Medicare would remove all copayments or cost sharing on preventive services. And also in 2010, Medicare beneficiaries would receive $500 towards paying for prescription drugs once they fall into the so-called "doughnut hole."

At a news conference Wednesday, Reid and other Democrats said the bill would provide health care coverage to 31 million people who don't have it now. According to preliminary estimates from the Congressional Budget Office, the measure would reduce the federal deficit by $127 billion over the next decade and by as much as $650 billion over the second 10 years.

"One hundred and twenty-seven billion in deficit reduction and 94 percent coverage equals 60 votes," said Sen. Charles Schumer, D-N.Y. "We're going to get there."

The Senate could vote on Saturday to begin debate on the bill but it's unclear if all of the chamber's Democrats will support Reid. Sen. Ben Nelson, D-Neb., said Reid's bill was "better in some ways than in other ways." After seeing an outline of the bill he did not say if he was any closer to voting for the measure.

This story was produced through collaboration between NPR and Kaiser Health News (KHN), an editorially independent program of the Henry J. Kaiser Family Foundation, a nonpartisan health-care policy research organization. The Kaiser Family Foundation is not affiliated with Kaiser Permanente.

Copyright 2023 Kaiser Health News. To see more, visit Kaiser Health News.

Mary Agnes Carey
Phil Galewitz