For taxpayers, health tab may not end
TERRY SAVAGE firstname.lastname@example.org Dec 25, 2009
Sen. Ben Nelson (D-Neb.), heading in to vote Thursday, got a promise of help for Nebraska's Medicaid bills for his vote.
Updated: May 3, 2013 12:15PM
The new health-care legislation that passed the Senate on Christmas Eve is known as the Patient Protection and Affordable Care Act. A different version of health-care reform passed the House last month. There will most likely be a "conference committee" of both chambers named to work out a compromise.
But if the Democrats in the House can muster enough votes, they could simply agree on the Senate version -- thereby ensuring quick action to enact the legislation before the president's State of the Union address Jan. 20.
The price we pay
Any legislation that passes is bound to be costly -- but no one knows how costly it will be. The nonpartisan Congressional Budget Office estimates the Senate version will cost $1 trillion over the next decade.
But then, when Medicare was originally passed in 1967, it was estimated that the hospital insurance (Part A) would cost about $9 billion annually by 1990. By 1990 the actual cost to the government was $67 billion! Since then, Medicare has been expanded to include catastrophic coverage and also Part D, prescription drug benefits.
The point is simply that it's impossible to estimate future costs of such broad legislation with any reliability. And this type of legislation typically is expanded upon over the years.
There's a second price that taxpayers will pay for this legislation -- and it has nothing to do with the actual changes in health insurance. These costs are hidden inside the 2,000-page bill: the amount of taxpayers' money legislators promised each other in exchange for the votes needed to pass the bill in the Senate.
The most public example was the promise that taxpayers of other states will ante up $100 million to pay for Nebraska's state Medicaid bill. That's what it took to buy the vote of Nebraska Sen. Ben Nelson. And Vermont will get $600 million over 10 years, while Massachusetts will get $500 million in the next decade. Remember, that's not the cost of the new health-care plan; it's simply the steep price the Senate had to pay to get their bill passed.
Here are some of the actual provisions in the two versions of health-care reform:
*Required insurance purchase -- Both Senate and House versions require Americans to buy health insurance, and they impose fines for noncompliance. But both plans also create a "hardship subsidy" for those below certain income levels, such as a family of four making up to roughly $88,000 annually, or 400 percent of the federal poverty level. Vouchers will be issued either by employers or by the federal government.
*Health insurance exchanges -- Slightly different versions of this plan passed the Senate (which calls for exchanges in each state) and the House (a national insurance exchange), where individuals and small businesses could compare and purchase coverage from private insurers and where vouchers would be accepted.
*Pre-existing conditions -- The Senate version says coverage cannot be denied for pre-existing conditions beginning in 2014 -- it's 2013 in the House version -- but within six months of enactment for children.
*Immediate coverage for uninsured with pre-existing conditions: The bill provides $5 billion in immediate federal support for a new program to provide affordable coverage to uninsured Americans with pre-existing conditions. This provision is effective 90 days after enactment, and coverage under this program will continue until new exchanges are operational in 2014.
*Dependent coverage for young adults -- Requires insurers to permit children to stay on family policies until age 26. This provision takes effect six months after enactment and applies to all new plans.
*Closing the "doughnut hole" in Medicare Part D -- The uncovered "gap" will be lowered by $500, and the Senate bill provides guarantees of a 50 percent price discount on drugs for lower income seniors caught in the gap.
*No lifetime coverage limits -- Senate bill says you cannot "run out" of insurance coverage. This provision takes effect six months after enactment and applies to all new plans.
Impact for employers
*Excise tax on employer health plans -- Beginning in 2013, a 40 percent excise tax is placed on the cost of health plans above a threshold of $8,500 for single coverage and $23,000 for family coverage. Thus, if an employer offers "too much" in the way of coverage, the employee would pay a tax. (Higher limits are set for those in high-risk professions, whose insurance would be more expensive.) Limits are to be adjusted for inflation, plus 1 percent annually.
*Free choice voucher -- An employer that offers the required minimum qualifying coverage, but whose employees choose not to take advantage of the employer's plan, must offer a voucher to qualifying employees (based on the federal poverty level) that is equal to what the employer's payment for the plan would cost.
*Large employer penalties -- If the employer has more than 50 employees, it must offer affordable health insurance or pay a penalty for each employee. Those who do offer health insurance must pay a penalty if a worker chooses to enroll in the insurance exchange purchase plan through use of a voucher.
*Senate bill: An additional Medicare tax of 0.9 percent on those who earn in excess of $200,000 ($250,000 on a joint return), to be paid by the employee.
*House bill: A 5.4 percent income tax surcharge on individuals with annual incomes over $500,000, as well as families earning more than $1 million.
Several sticky issues remain to be considered. They include coverage for illegal aliens, the issue of funding abortions and the issue of a so-called "public option," which was passed by the House but not the Senate.
So this bill is a long way from being signed into law. Then again, the whole concept of health-care legislation has come a long way in the last two months. Now that the final version is headed down to the wire, you can expect a lot more horse-trading of your tax dollars in the days ahead. And that's The Savage Truth.