Moments ago, Senate Majority Leader Harry Reid (D-NV) released the merged Senate health care bill. According to preliminary CBO analysis, the Senate bill costs $849 billion over 10 years and reduces the deficit by $127 billion over 10 years. The legislation could further reduce the deficit by up to $650 billion cut over the following decade, the budget office says.

The bill –which includes a national public health insurance plan with the option for states to pass a law and opt-out — reduces the uninsured by 31 million Americans and covers 98% of Americans by 2019.

The bill increases the threshold for the so-called Cadillac tax, raises the payroll tax by 0.5% on individuals who earn more than $200,000 and families earning more than $250,000 a year, and cuts waste from Medicare. The payroll tax increase would only apply to employees (not employers) and generate $54 billion.

The bill maintains the Senate Finance Committee’s immigration language and preserves much of the more moderate Capps-abortion compromise. Federal dollars can only be used to pay for abortions when the pregnancy threatens the life of the mother or results from rape or incest; private premiums must be used to pay for any other type of abortion, including those for health reasons. Each plan in Exchange will decide whether to cover additional abortion services and at least one plan in each market must offer abortion services and one plan must not. In the public option, the Secretary can cover abortion only if the procedure is financed with private funds.

Since the Exchanges don’t open open until 2014, the bill offers immediate insurance reforms for Americans purchasing coverage in the individual market. Insurers will no longer be allowed to rescind coverage or impose life-time or annual limits and will be required to meet a medical-loss ratio of 85 percent. Americans who are denied coverage because of a pre-existing condition would participate in a national high-risk pool program until the Exchanges are established. Young Americans can stay on their parents’ policies until they turn 26. Small businesses will receive a tax credit.

Below is a comparison of the relevant provisions in the House and Senate legislation:

“The problem with long-term care is that it suffers from a lack of interest,” Howard Gleckman, a resident fellow at the Urban Institute and author of “Caring For Our Parents,” told me in an interview. “When I talk to members of Congress about this issue, they just don’t care. It’s not on their radar screen. And their attitude too often is, ‘I’ve got enough trouble here with health reform, I don’t want to deal with this too.’” But “people who have multiple chronic disease, or severe disabilities, or living in frail old age, don’t make a distinction between what’s their medical care and what’s their long term care. You just need care,” he stresses.

Senate Majority Leader Harry Reid (D-NV) is rumored to have included the Community Living Assistance Services and Supports Act, or CLASS Act – a voluntary long-term care insurance program which covers medical and non-medical services like dressing, bathing, and using the bathroom — in the merged Senate bill, despite criticism from economists that the program would eventually pay out more in claims that it would collect in premiums and become an unfunded liability.

Long-term care proponents contend that the current system of financing long-term care is also unsustainable. Americans spend more than $200 billion a year on long term care services in nursing homes, at home, or in assisted living facilities. “Medicaid is now the largest single provider of long-term care costs — it spent more than $100 billion last year, over one-third of its budget” and “paid more than 40 percent of the nation’s total long-term care bill.” Families and senior citizens (and Medicare to a lesser extent) pick up the rest of the tab, often spending down to “$2,000 in financial assets” to qualify for Medicaid coverage. By mid-century, the Congressional Budget Office predicts that the nation will have to spend 16% of anticipated federal revenues on Medicaid to fund care for the baby-boom generation.

“So the question is how do we fix this system? How do we create a system that can both relieve the burden on families and relieve this burden on government?,” Gleckman asks. The CLASS ACT is just one solution. It establishes “a national insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become severely functionally impaired.” All working adults will be automatically enrolled in the program, unless they choose to opt out.

Gleckman sympathizes with critics who say that CLASS may become unsustainable over the long term and argues that policy makers must design a plan that attracts enough young participants and offers a fair benefits package to its enrollees. The plan must be both affordable and comprehensive:

A simple way to do it [ensure that the program is not paying out in claims more than it is taking in] is to make it mandatory. That’s what the Germans have done, and the French and the Japanese and almost every other industrialized nation around the world has done…. If you have a mandatory program, you accomplish two things. The first is you of course eliminate the adverse selection problem, because everyone is in the program, and the other thing is, you are able to push down rates to level where they are pretty easily affordable for most of the population.

Gleckman says that a mandatory long-term insurance program could push down premiums to $45 a month on average, even lower ($12-$20/month) for younger Americans. “But again, the problem is the politics. Can you really do a mandate in the current political environment? The sponsors of the CLASS act made a decision that they couldn’t, so consequently they’re struggling to create a program that has a benefit that is descent enough that people would be interested in, but doesn’t have premiums so high that it will chase people away.”

Working within these political realities, lawmakers can amend the existing CLASS legislation to ensure that the program is sustainable over the long term:

- Vary premiums by age: Currently, enrollee would pay the same premium for life. This increases the cost of the average premiums and pushes young people out of the program. By increasing the premium slightly every year, “you make it possible to sell to young people at a very very low rate.”

- Greater flexibility to HHS flexibility in design: Since it’s unclear who will participate in the program and whether high premiums will detract younger Americans from enrolling, giving the HHS secretary greater flexibility in varying premiums and benefits would ensure that the program is fiscally sound over time.

– Buy the insurance with pre-tax dollars: To encourage participation, premiums could be purchased with pre-tax dollars.

- Requirement that only working adults can purchase coverage: While nonworking spouses also need coverage, limiting enrollment and risk exposure to working Americans may be an option for strengthening the solvency of the legislation.

“Affordability is the key to this,” Gleckman says. “They’ve got to find a way to keep premiums below $100.” Moreover, policy makers must stop talking about long-term care “as a way to pay for the rest of health care reform.” “The more you talk like that, the more people don’t see this as insurance, they just see this as another government bait-and-switch program. ‘I’m going to be paying all this money, and 40 to 50 years from now, when I actually need it, it’s not going to be there.’ I would design it so that it would really fund itself and the money stayed separate from the rest of government.”

When Senate Majority Leader Harry Reid (D-NV) unveils the merged Senate bill and its CBO score this afternoon at 5pm to the Democratic caucus, he will not have the commitment of all 60 senators for a procedural vote to begin considering the legislation on the Senate floor.. Reid remains “cautiously optimistic” that the Senate will start considering the bill on Friday, although several Senate moderates have insisted on taking 72 hours to review the legislation before voting to start debate.

Democrats are also indicating that they may “short-circuit the legislative process” to pass health care reform by December 18th, the last day Congress is in session. “The most talked about method is end running the formal conference committee process in favor of some sort of mini-conference. Democratic officials in the White House and Congress are envisioning an end game similar to the way the $787 billion stimulus package came together with congressional leaders and White House aides hashing out the differences behind closed doors.”

Details of the merged legislation remain elusive but here is the latest:

- Bill will cost less than $894B/10 years: The “preliminary estimates by the nonpartisan Congressional Budget Office, the legislation’s official scorekeeper, have indicated that the Senate measure would cost far less than the bill the House approved last week, while lowering the federal deficit further over the long term.” This suggests that Reid was able to bring down the price tag and increase the new revenue. To lower the price tag he could have lowered the amount the bill spends on subsidies, further expanded Medicaid, decreased funding for prevention and wellness, or tinkered with a few other provisions like the tax credit for small businesses. Reid may also replace the opt-out national public option with Sen. Tom Carper’s (D-DE) ‘non profit board’ trigger compromise.

- Bill may lower the maximum contribution for premiums for families 133-150% FPL from 12% to 10%: Family USA’s Ron Pollack tells TNR’s Suzy Khimm that “the Senate leadership has basically decided to give more help to middle-class families on the higher of the subsidy spectrum, whose incomes are 300 to 400% above the poverty line.” The legislation may lower the maximum premium contribution from 12% to 10%, but increase the premium contribution for the lower end of the spectrum (Americans between 133-150% of the federal poverty line) from 2% to about 3%.

- Roll back Cadillac health plan tax, replace some of the revenue with a payroll tax: “To scale back a plan to tax high-cost insurance policies, an idea that is highly unpopular among labor unions, Reid is expected to propose an increase in the Medicare payroll tax for families earning more than $250,000 a year.” “The provision would be expected to generate about $50 billion over the next 10 years” and “the extra revenue would allow Reid to reduce the number of people who would be hit by a new 40 percent tax on the most expensive insurance policies.” According to the Dow Jones, “Reid has already raised the family threshold by $2,000 for everybody.”

- Bill will invest in the CLASS Act: Reid is expected to incorporate the Community Living Assistance Services and Supports Act, or CLASS Act, a long-term care program championed by the late Sen. Ted Kennedy. The program was part of the HELP Committee’s bill and generated some $59 billion in new revenues from premiums to help fund reform. The CLASS Act establishes “a national insurance program to be financed by voluntary payroll deductions to provide benefits to adults who become severely functionally impaired.” All working adults will be automatically enrolled in the program, unless they choose to opt out. “Fiscal conservatives and government economists have questioned whether the program would be financially sustainable over the long run, and insurance companies are lobbying to strip it from the health care bill.”

- Bill could remove a provision that removes insurers’ anti-trust exemption: The New York Times suggests that in response to demands from Sen. Ben Nelson (D-NE), “the leaders appear willing to drop plans to use the bill to strip health insurance companies of their antitrust exemption.”