Senate Majority Leader Reid Unveils Democrats' Health Reform Plan
The Facts
On November 18, 2009, Senate Majority Leader Harry Reid of Nevada put forth the Democrats’ health reform plan, the Patient Protection and Affordable Care Act. The more than 2,000 page bill was crafted by merging, tweaking and augmenting health reform legislation approved by the Senate Finance Committee in October and the Senate Committee on Health, Education, Labor and Pensions in July. Set forth below are some of the bill’s principal provisions.
- Requires most legal residents to obtain health insurance or pay a penalty of $95 in 2014, $350 in 2015 and $750 in 2016
- Imposes a $750 per employee penalty on firms with more than 50 workers that do not offer coverage if any of the firm’s employees obtain subsidized coverage through the new health insurance exchange
- Requires coverage of prevention and wellness benefits and exempts these benefits from deductibles and other cost-sharing requirements
- Implements insurance market reforms including disallowing lifetime and annual limits and prohibiting preexisting condition exclusions
- Substantially reduces the growth of Medicare payment rates for many services (as compared to growth rates under current law)
- Creates a new independent Medicare advisory board, which could recommend payment reductions
- Seeks to promote the quality and efficiency of health care by linking payment to better quality outcomes
- Imposes a 40 percent excise tax on employer-sponsored health insurance with annual premiums above $8,500 for single coverage and $23,000 for family coverage
- Imposes annual flat fees of $2.3 billion on the pharmaceutical manufacturing sector, $2 billion on the medical device manufacturing sector and $6.7 billion on the health insurance sector
- Imposes a 5 percent excise tax on voluntary cosmetic surgical and medical procedures
- Increases the Medicare payroll tax rate from 1.45 percent to 1.95 percent on individuals earning over $200,000 and couples earning more than $250,000
- Sets up health insurance exchanges through which approximately 25 million people are estimated to purchase health insurance coverage
- Creates a new public plan – the Community Health Insurance Option (states could opt out, and the government would negotiate payment rates with providers)
What’s at Stake
Given the sweeping nature of the bill, every aspect of health care in the United States would be affected.
Steps to Consider
- Carefully evaluate the impact of the provisions.
- Assess the cost of compliance with the new provisions.
- Examine ongoing business decisions in light of the direction health reform is taking.
- Consider working to impact the shape of health reform legislation.
