DorlandHealth

Richard Scott

The final step toward the passage of a comprehensive health care reform bill is underway. Presently Congress is debating the two voluminous pieces of legislation that have passed in the House and the Senate respectively. The two bills contain both major and minor discrepancies that lawmakers will need to approach, evaluate, dissect and meld into one before a final bill is put up for the most decisive vote on health care legislation in more than four decades.

While deep ideological divides remain among individual members and national parties, experts expect a bill, in some shape or form, to pass in late January. In the meantime, the key differences between the bills will take center stage in formal proceedings and—all too likely—behind closed doors. The following is a comparison of seven issues that legislators will need to reconcile to achieve a unified bill.

Individual mandate. Both bills call for a requirement of coverage along with imposed penalties for not having coverage, but their methods vary. The Senate bill would fine a flat rate of at least $750 or 2 percent of household income when it is fully phased in (2016), whichever is more. The highest penalty would be $2,250. The House bill solely charges a percentage penalty of 2.5 percent above the filing threshold. The threshold is currently $9,350 for individuals and $18,700 for couples. The penalty cannot exceed the cost of the average national premium.

Employer responsibility. As with the individual mandate, both bills penalize employers who do not provide coverage. Yet the House bill, which would penalize nonproviding employers an 8 percent payroll tax on employee wages, provides a much steeper penalty. The Senate bill would charge employers that do not offer coverage a fee of $750 per employee. The House bill would tax on all workers—full-time, part-time and temporary. The more lenient Senate bill charges only for full-time employees. Data from the Tri-Committee House Staff shows that while the House bill would potentially reap $135 billion from employers who do not provide coverage, the Senate bill would max out at just $28 billion.

Medicare. Several discrepancies exist in language addressing the behemoth that is Medicare. For Medicare Advantage (MA), the House bill contains stricter provisions about MA overpayments (when compared to plain Medicare payments) by serially phasing down payments. While the Senate bill would establish a new “competitive bidding approach,” estimates project that the House bill would total $170 billion in MA savings, whereas the Senate bill would achieve $120 billion.

There is also language about readmission policy. The House bill holds all hospitals accountable for preventable hospital readmissions, starting in 2012, while the Senate bill takes a softer approach and holds selected hospitals accountable, not including some rural hospitals and critical access hospitals. The Senate policy would begin in 2013.

Concerning the enigmatic doughnut hole provision in Medicare Part D, the Senate bill would adopt the discount the Obama administration leveraged with PhRMA earlier this year and offer a one-time reduction of $500 in 2010. The House bill, meanwhile, would offer a rebate program along with the PhRMA discount to do away with the doughnut hole entirely by 2019.

Medicaid expansion. Both bills would expand of  Medicaid coverage. The Senate bill would increase coverage to 133 percent of the federal poverty line, while the House bill would go to 150 percent. More glaring is a difference in Medicaid access, with the House bill upping Medicaid primary care payments to Medicare levels. The Senate bill contains no increase in payment fees. The House’s payment increase would come at a cost of $57 billion.

Revenue sourcing. With such a large-scale bill, the question of financing is of prime importance, and the two bills approach revenue strategies in distinct ways. The House bill calls for a 5.4 percent surcharge on individuals making more than $500,000, effective 2011. This accounts for roughly 82 percent of its entire revenue. The Senate bill has no such provision, and its revenue sources are more widespread. Instead, it would charge a 40% excise tax on group coverage exceeding $8,500 per individual or $23,000 for a family (the so-called Cadillac plans). It also would add a 0.9 percent payroll tax on individuals making more than $200,000. The House bill would do neither.

Further, the Senate bill would tax manufacturers and importers of branded drugs and impose an annual fee on health insurance plans. The House bill does not touch either of those areas, instead focusing half of its remaining revenue needs on taxes outside of the health care industry.

Premiums and out of pocket costs. The House bill limits potential out-of-pocket costs to a greater degree, capping them at $5,000 for an individual and $10,000 for a family. The Senate bill caps them at $6,150 and $12,300 respectively. These differences are much greater for the very poor. For an individual between 133 and 150 percent of the federal poverty line, the House limit stands at $500 and the Senate limit at $2,050. In a reversal, if an individual earns between 250 to 400 percent (roughly $23,000 to $37,000) of the poverty line, the Senate bill limits out-of-pocket costs to a smaller number than the House bill.

Public option. Once considered a must-have provision in any health reform proposed by Democrats, the public option does not exist in any Senate bill language. A provision exists in the House bill, but any notion of a public option is largely considered a dead issue.