Senate and House Iron Out The Differences in Their Health Reform Bills

January 08, 2010

Senate and House Iron Out The Differences in Their Health Reform Bills
Senate passage of its version of health reform legislation on Christmas Eve completed a historic year in Congress and in the nation's domestic policy debate.  The House and Senate will still have to resolve important differences in their bills this month before they can send a final bill to President Obama.  Whether to tax health benefits to fund coverage for the uninsured; whether to create a public insurance health plan option to hold down health costs and keep insurers honest; and how to address the "doughnut hole" gap in prescription drug coverage are three top issues.  Instead of a formal conference committee, the process will involve leaders shuttling the measure back and forth, until both chambers have agreed to the same text.  Democratic leaders believe that many Senators and Representatives would use a formal conference to delay, not improve, health care reform.  Both the House and Senate bills provide more affordable coverage for retirees and seniors.  They each provide cost relief for early retiree coverage: a new re-insurance program will pick up 85% of the cost of treatments between $15,000 and $90,000 for retirees ages 55-64.  They also offer a $500 immediate increase in the Medicare drug allowance; a phased closing of the doughnut hole, during which seniors have to pay 100% of drug costs; and a 50% cut in the price of brand name drugs for seniors in the doughnut hole until the gap is eliminated.  On Monday, the Alliance signed onto a letter from the Leadership Council of Aging Organizations, a broad coalition of seniors groups, urging Senators to close the gap as quickly as possible.

Both bills would also contain costs in a variety of ways.  For instance, they would reduce over-payments to private Medicare Advantage plans by $135-$170 billion over ten years; eliminate co-payments for preventive care, thereby lowering the odds of a more expensive, catastrophic illness down the line; and ultimately reduce the federal deficit by approximately $130 billion over ten years.  Both bills prohibit denial of coverage or higher rates due to pre-existing conditions and ban annual or lifetime limits on claims payments by insurers.  They also reduce age-based variation in premium rates.  Differences between the bills include whom to tax and how many people to cover. The Senate wants to tax higher-end health plans valued at over $8,500 for most individuals and $23,000 for couples, raising $150 billion.  For retirees, the amounts are higher: $9,850 for individuals and $26,000 for family coverage.  However, the House wants to increase income taxes on the wealthiest Americans