Today, three separate House committees — Ways and Means Committee, Energy and Commerce Committee, Education and Labor Committee — released a single health care reform bill, the American Affordable Healthy Choices Act. The bill establishes “a mandate for most legal residents to obtain insurance, significantly expand eligibility for Medicaid, and set[s] up insurance “exchanges” through which certain individuals and families could receive federal subsidies to substantially reduce the cost of purchasing that coverage.” According to an analysis by the Congressional Budget Office, the legislation would cost $1 trillion over 10 years and cover 94 percent of Americans (97% if you don’t count the undocumented).
As Jonathan Cohn reports, “between savings and a new surtax on the wealthy, the bill pays for itself. In other words, it won’t inflate the deficit.” Five hundred billion comes from savings in Medicare and Medicaid and “the rest comes from a surtax on the richest 1.5 percent.”
Most importantly, the CBO coverage tables undermine the conservative claim that a public option would eliminate private insurance and erode employer-sponsored coverage. The House bill actually increases the number of people who receive coverage through their employer by 2 million (in 2019) and shifts most of the uninsured into private coverage. By 2019, 30 million individuals would also purchase coverage from the Exchange, but only 9-10 million Americans (or approximately 1/3) would enroll in the public option, the rest would enroll in private coverage.
A more detailed discussion will soon follow, but here is a table of provisions and the estimated savings:
|Provisions||Sexy Facts||CBO Score Over 10 Years|
|Individual Mandate||Individuals who don’t purchase coverage would pay tax equal to 2.5% of modified adjusted gross income.||Exceptions: dependents, nonresident aliens, living outside of US, prisoners, religious conscience objectors||will bring in $29 billion|
|Large Employer Mandate||Provide coverage or pay fee equal to 8% of the average wages.||Part-time employees can receive benefits from employer, or can seek coverage in Exchange, which will be partly financed by Employer.||will bring in $163 billion|
|Small Employers||Businesses with payrolls that do not exceed $250,000 exempt from employer responsibility.||> $250,000, payroll penalty @ 2%. Rises to 8% for firms with payrolls > $400,000. Small business tax credit available.||will cost $53 billion (tax credits)|
|Medicaid Expansion||133% FPL||Medicaid reimbursement rates for primary care providers grow to 100% of Medicare rates by 2012.||will cost $438 billion|
|Subsidies||between 133 – 400% FPL on sliding scale||In the first two years, an affordable credit eligible individual may use an affordability credit only with respect to a basic plan.||will cost $773 billion|
|Public Option||Medicare rates for 3 years w/ 5% bonus for physicians that participate in Medicare and the public plan.||The Secretary will loan the public plan $2,000,000,000 for start-up funds. The public plan can negotiate drug prices from the start. Provider participation is voluntary – Medicare providers are presumed to be participating unless they opt out.||10% cheaper and would enroll 9-10 million people|
|Insurance Regs||Guarantee issue, modified community rating (2:1), no rescissions||Cap of annual out-of-pocket spending, $5,000 for individuals, $10,000 for families||—|
|Financing||About half will come from savings within the system, the other half will be financed through a surtax on the rich.||$350,000 – $500,000: 1% tax on modified adjusted gross income. $500,000 – $1,000,000: 1.5% tax on modified adjusted gross income. $1,000,000 plus: 5.4% of modified gross income||—|