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Comparison of Key Health Care Reform Legislation

Last Updated: 07/31/2009

Issues:
Pay-or-Play Mandate
Employer Lawsuit Liability for Adverse Plan Decisions
Individual Mandates
"Free-Rider"
Public Plan Option
ERISA
Market Reform
Exchange
Benefits
Collective Bargaining Agreements
Individual and Small Business Tax Credits
Regulation
Other
Current NRF Position

Issue: Pay-or-Play Mandate

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • Provide qualifying coverage and contribution or pay 8% of payroll tax (reduced for small employers – see below).  Pro-rated tax for part-time workers.
  • Employer must cover 72.5% of individual coverage and 65% of family coverage.
  • Failure to meet both coverage and contribution measures results in a fine of $100 per employee per day.
  • Separate elections for full and part-time workers may be permissible.
  • Employer premium contribution follows employees who opt-out of employer plan after five years.
  • Small business percentage of payroll tax is based on payroll size: 
  • $250,000 or less (0%);
  • $250,001 - $300,000 (2%);
  • $300,001 - $350,000 (4%);
  • $350,001 - $400,000 (6%)
  • $400,001 and higher (8%)
  • Employer must provide qualifying coverage and pay 60% of the premium cost for full and part-time employees or pay a penalty tax.
  • Maximum annual tax (pro-rated on a monthly basis) is $750 per full-time employee and $375 per part-time employee.
  • Firms with 25 or fewer employees are exempt.
  • Dependents covered until age 26.
  • Employers cannot define eligibility; federal length of service limitation will be set.
Options under Consideration
  • “Free-Rider” option, only.

Issue: Employer Lawsuit Liability for Adverse Plan Decisions

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • State-based lawsuits (e.g. Patients’ Bill of Rights) against insurers and employers (group health plans) stemming from adverse plan decisions with potentially unlimited liability.
  • None
  • None


Issue: Individual Mandates

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • Enforced through tax penalty.
  • Must obtain acceptable coverage as of Jan. 1, 2013 to face a surtax of 2 percent of the excess of the taxpayer’s AGI over the applicable threshold for the taxpayer.
  • Tax is capped at the national average premium for self-only basic coverage through Exchange.
  • Religious and hardship exemptions.
  • Enforced through tax penalty.
Options under Consideration
  • Enforced through fine for non-compliance based on average cost of the lowest cost option.
  • State option for auto enrollment.
  • Mandatory auto enrollment for employers with more than 200 employees.


Issue: "Free-Rider"

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • None
  • None
Options under discussion
  • Generally, if an employer offers coverage to full-time employees, there is no exposure to “free-rider” or “anti-crowd out” penalties. Yet to be determined – whether coverage or contributions specifications will apply.
  • Employees can opt out of employer plan if they are offered coverage (a.k.a. a firewall) but will not be eligible for exchange subsidies. Under discussion – whether a hardship opt-out should be allowed for individual employees. The better course may be to allow subsidies to buy up to more affordable coverage in the employer plan.
  • An employee eligible for Medicaid can apply for Medicaid coverage at any point without consequence to employers who do or do not offer coverage.
  • An employee who is not offered coverage and is eligible for a subsidy inside the exchange, employer is responsible for some percentage (TBD) of the subsidy amount.
  • Whether or not an employer who offers coverage will be responsible for some percentage of the subsidy if a subsidy-eligible employee receives a hardship opt-out is still under discussion.


Issue: Public Plan Option

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • Strong public plan option offered within Exchange.
  • Medicare rates for first three years.
  • 5% bonus for providers who participate in Medicare plus public option.
  • HHS-based plan – a.k.a. Community Health Insurance Option.
  • Strong public plan option offered within Exchange.
  • Reimbursement capped at average local rate but could go lower.
  • Ostensibly must play by same rules as private plans but will be backed by government for first three months of claims and receive protection against higher percentage of bad claims.
Options under Consideration
  • Range of options under consideration from strong public plan to public plan co-op.


Issue: ERISA

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • Preempts ERISA section 502 (remedies); preserves ERISA section 514 (preemption) – could lead to PBOR-style liability for insurers and group health plans.
  • Must offer Qualified Health Benefit Plan (QHBP) with all benefit requirements and market rules or a Current Group Health Plan (CGHP) defined as a grandfathered plan.
  • After five years, CGHP (including ERISA self-insured) must meet all QHBP requirements, including minimum benefits but not rating rules.
  • None
  • None


Issue: Market Reform

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • For QBHP or fully insured plans, premium rates may only vary by age (2 to 1), geographic area and family structure.
  • Pre-existing condition exclusions prohibited.
  • Guaranteed issue and renewability of coverage.
  • For fully insured group and individual coverage – premium rates may only vary by age (2 to 1), geographic area and family structure.
  • Pre-existing condition exclusions prohibited.
  • Guaranteed issue and renewability of coverage.
Options under Consideration
  • Applies to small group and individual market – adjusted community rating (7:5:1).
  • No health status or preexisting condition limitations allowed.
  • Guaranteed issue and renewability of coverage.


Issue: Exchange

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • National exchange with optional state-based or group of state exchanges
  • Subsidies only available through exchange.
  • Size transition – year 1 (individuals and employers with 10 or fewer employees); year 2 add employers with 20 or fewer employees; year 3 add larger employers as allowed.
  • Coverage levels – basic, enhanced, premium, premium-plus.  Plans offering within exchange must build up from base levels of coverage in order to offer more generous packages.
  • State-based exchange (Gateway) with federal fall-back for individuals, qualified individuals and qualified employer groups.
  • Subsidies only available through Gateway.
Options under Consideration
  • State-based Exchange for individuals and small groups (SHOP Act)
  • Subsidies available only through Exchange.
  • Four benefit categories – matched to actuarial value to reflect plans currently available.
  • Bronze (minimum creditable coverage) – 65%; Silver – 73%; Gold – 81%; Platinum – 90%.


Issue: Benefits

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • Essential benefits package covering broad range of medical, mental health, prescription drug and rehabilitative services, among others.
  • Set by Health Benefits Advisory Committee one year after enactment.
  • No cost-sharing for preventative services.
  • Annual limit on cost-sharing - $5,000 for individual, $10,000 for family.
  • Lifetime or annual limits prohibited.
  • Essential benefits package covering broad range of medical, mental health, prescription drug and rehabilitative services, among others.
  • Set by Medicare Advisory Council – will determine benefits package, contribution and subsidy recommendations.
  • Lifetime or annual limits prohibited.
Options under Consideration
  • Benefits package covering broad range of medical, mental health, prescription drug and rehabilitative services, among other.


Issue: Collective Bargaining Agreements

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • None
  • Act does not apply until the later of termination of the agreement or one year.
  • None


Issue: Individual and Small Business Tax Credits

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • Less complicated
  • Employers with 25 employees or less.
  • 50% tax credit for coverage costs.
  • Average employee compensation must be less than $20,000.
  • Size-based phaseout for employers with more than 10 employees.
  • No credit allowed for highly compensated employees -- $125,000 or more.
  • Complicated
  • Small businesses with 27 or fewer full time employees or self-employed individuals may be eligible for credits based on a complicated formula using a base credit amount times the number of full time eligible employees multiplied by a factor of .5 if coverage was offered under approved mechanisms the previous year or by 1.25 if the employer did not previously offer coverage.
  • The base credit is comprised of a combination of factors, including average employer contribution in the state, the number of employees and the wage level of employees.
Options under Consideration
  • Less complicated
  • Tax credits for individuals and families up to 300% of FPL.
  • Temporary small business tax credit for firms with fewer than 25 employees and with wages below $40,000 until state Exchange is established


Issue: Regulation

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • Health Choices Administration created to coordinate national exchange and administer subsidies.
  • Medical Advisory Council created to determine benefit coverages, contribution and subsidy amounts.
  • Findings may only be overturned by a joint resolution of Congress.
  • None


Issue: Other

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • None
  • Class Act – establishes voluntary program to provide individuals with functional limitations with cash assistance to allow them to maintain personal and financial independence.
  • Five-year vesting for eligibility for benefits.
  • Mandatory auto-enrollment through employers.
  • Section 125 plans can pay for private long-term care insurance premiums.
  • None


Current NRF Position

House – Tri-Committee
"America’s Affordable Health Choices Act"
Senate Health, Education, Labor and Pensions CommitteeSenate Finance Committee
  • Opposed – would key vote against as written.
  • Opposed – would key vote against as written.
  • Concerned - awaiting further development of Committee options.