The Congressional Budget Office’s analysis of the merged Senate health care bill, incorporating the manager’s amendment, concludes that the legislation would cost $871 billion over 10 years, reduce the deficit by $132 billion over 10 years and by $1.3 trillion over 20 years. The bill would extend insurance to 31 million individuals, covering approximately 94% by 2019.

Here is how the new merged bill compares to the earlier version:

Some of the changes include:

- Holding Insurers Accountable: Insurers in large group market have to maintain a medical loss ration of 85%. Insurers in the small group market have to maintain a medical loss ration of 80%. Insurance companies who jack up their rates will be barred from competing in the exchange.

- Regulations For Children: Starting immediately children cannot be denied health coverage due to pre-existing conditions.

- Nonprofit Insurers Excluded From Tax: Nonprofit insurers are excluded from the tax on the insurance industry.

- Employers Can Offer Vouchers: Individuals and families under 400% of the federal poverty line who receive employer-sponsored coverage and spend 8-9.8% of their income on premiums, could “convert their tax-free employer health subsidies into vouchers that they can use to choose a health insurance plan in the new health insurance exchanges.

- Changes To Medicare Commission: The Medicare Commission will now examine the effect programs have on National Health Expenditures and will be prohibited from increasing premiums. The committee will make non binding recommendations if the Medicare spending rate is below or on target.

- New Choice Of Coverage From Nonprofits: Individuals could enroll in a national health insurance plan managed by the Office of Personnel Management, the same entity that oversees health plans for Members of Congress.

- Investment In Community Health Centers/Rural Areas: A substantial investment in Community Health Centers and more funding for rural health care providers and training programs for physician and other types of health care providers.

- Expands Small Business Tax Credit: The credits begin a year earlier – in 2010 and small businesses are eligible for up to six years. The wage thresholds for small business tax credits is also increased.

- Satisfying Gun Owners: Does not require individuals to disclose whether they own a gun. Gun ownership cannot be factored into premiums or coverage decisions.

- New Taxes: Increases the payroll tax on high income earners from 0.5% to 0.9%; the tax begins in 2013. A 10% tax is imposed on indoor tanning services and the ‘botox tax’ is removed.

Majority Leader Reid will file three cloture motions tonight and the Senate could pass the final legislation on Thursday, December 24th at 7pm. The Senate is expected to vote for cloture on the manager’s amendment Monday at 1am. The second cloture vote on the substitute is scheduled for Tuesday morning and the final cloture vote on the underlining bill could occur Wednesday afternoon.

Note: my colleague Emma Sandoe of DC Progressive contributed greatly to this post.

This morning, Sen. Ben Nelson (D-NE) held a press conference to announce that he would provide the 60th vote for cloture on the Senate bill with the manager’s amendment.” Nelson praised the Obama administration and Majority Leader Harry Reid (D-NV) for addressing his concerns but warned his colleagues, “I reserve the right to vote against cloture vote if there are material changes to this agreement in the conference report. ”

Abortion and Medicaid expansion may have been the largest sticking points to winning over Nelson’s votes, but Nelson dodged a question about the extra Medicaid matching funds for his state and instead highlighted the amendment’s changes to flexible savings accounts (FSA), rural hospitals, and a new report that would study successful malpractice reforms “to find out more information out about it,” Nelson said.

The abortion language — which allows states to prohibit abortion in their exchanges and requires strict segregation of private and public funds — may be the most significant alteration. In the video below, Nelson lays out the compromise:

First of all there are 12 states that have banned abortion in public plans and there are 5 states that have banned abortion in both private and public plans. We wanted to make sure in this legislation that it was clear that there was no preemption of the right of states to continue to make those bans.

Watch Nelson explain how the funds would be segregated:

“My chief of staff and I basically developed this idea…We already agreed how to account for the money, the premium dollars so finding then the mechanism for coverage was the next. And this we just stumbled on to,” Nelson admitted before confirming that abortion was the last unresolved issue.

The new managers amendment to the merged Senate bill incorporates Sen. Bob Casey’s (D-PA) language strengthening the segregation of private and public funds and increasing federal support for adoptions, with a new provision that would allow states “to prohibit abortion coverage in qualified health plans offered through an Exchange in such State if such State enacts a law to provide for such prohibition” (page 38 of the amendment).

In other words, states can opt-out of abortion coverage that goes beyond the Hyde amendment. A state may also repeal the prohibition and allow plans in the exchange to offer abortion coverage, so long as those procedures are financed with private premiums.

In states that don’t prohibit abortion coverage within the exchange, 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 exchange will also have to offer at least one plan that does not offer abortion.

The managers amendment also gives state Commissions of Insurance the ability to audit insurers to ensure compliance with the segregation of funds in states where abortion is available, increases the Adoption Tax Credit and federal support for adoption.

This compromise differs from the so-called Stupak language in the House bill that prohibits federal funds from being used for abortions or for plans that include abortion services. Nelson brought his own Stupak-like amendment to a vote on the Senate floor, but it ultimately failed.

This morning’s managers amendment to the merged Senate health bill goes a long way towards satisfying the demands of Democratic hold-out and all-important 60th vote Sen. Ben Nelson (D-NE).

Nelson has recently complained that the proposed expansion of Medicaid to those earning below 133% of the Federal Poverty Line (FPL) would burden his state of Nebraska and suggested that states should be able to opt-in to the program.

Under the current merged legislation (the version unveiled on November 18th), the federal government fully finances care for the expanded population for two years and increases its matching funds (known as FMAP) thereafter. Page 98 of the managers amendment specifically identifies Nebraska for higher federal matching funds, fully funding its expansion:

‘‘(3) Notwithstanding subsection (b) and paragraphs (1) and (2) of this subsection, the Federal medical assistance percentage otherwise determined under subsection (b) with respect to all or any portion of a fiscal year that begins on or after January 1, 2017, for the State of Nebraska, with respect to amounts expended for newly eligible individuals described in subclause (VIII) of section 1902(a)(10)(A)(i), shall be determined as provided for under subsection (y)(1) (A) (notwithstanding the period provided for in such paragraph)

Subsection (y)(1)(A) refers to page 399 of the original merged Senate legislation which fully funds state Mediciad expansions for the first two years. The manager’s amendment also provides 2.2% increase in FMAP to help states finance their existing Medicaid programs.