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July 25, 2014

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HEALTH CARE:

Separating reform fact from fiction

Here are answers to some common questions — not necessarily what you heard in the summer’s squabbling

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Pablo Martinez Monsivais / Associated Press

Many Republicans remain seated while Democrats applaud President Barack Obama during his address Wednesday to a joint session of Congress on overhauling the health care system. Obama set out principles he wants to see in the final legislation resulting from the various bills working their way through both houses.

After town-hall meetings, congressional hearings and a prime-time presidential address on health care reform, many questions remain about the proposals being considered on Capitol Hill.

Lest “You lie!” be the last word on the issue, here are some answers on how it would work, what it would cost and, finally, that most American of questions: What’s in it for me?

What are the biggest changes this proposal would make in the health insurance system?

Under President Barack Obama’s health care plan and the legislation going through Congress, every American would be required to have basic health insurance. Those without insurance from an employer or government entity such as Medicare, Medicaid or the Veterans Affairs Department would be required to buy it or pay a fine.

The penalties levied against those without insurance would be $750 a year ($1,500 for families) under the Senate bill or 2.5 percent of modified adjusted gross income under the House bill.

Subsidies in the House and Senate bills would help lower-income families pay for insurance.

Also, new laws would prevent insurance companies from denying coverage for preexisting conditions and cap patients’ out-of-pocket costs for care.

What happens to my current health care coverage through my employer?

Most Americans receive coverage through their jobs and the president said in his speech last week that “nothing in this plan will require you or your employer to change the coverage or the doctor you have.”

However, because some companies will likely opt not to provide coverage, the nonpartisan Congressional Budget Office estimates that the share of people covered by their employer would drop about by 10 percent, or 15 million.

What if I don’t have insurance or lose my current coverage?

Those who are uninsured would be able to purchase insurance on their own from a new exchange, a marketplace for companies offering policies.

Individual insurance has always been pricey. But rates are expected to drop as companies compete for customers on the exchange. Estimates are that 47 million Americans are uninsured, including one in five Nevadans.

What is the public option?

The public option would be one of the health care plans offered on the new insurance exchange alongside private insurance companies’ plans.

The House bill would establish a government-run public option. The Senate bill would instead establish national or regional co-operatives with the same objective of increasing competition among insurance providers and thus driving down the cost of insurance.

The president (along with Nevada’s Democrats in Congress) prefers a public option, but is open to another system that could provide competition.

What if I can’t afford to buy insurance on the exchange?

Government assistance would be provided to pay for health care. Subsidies would be offered on a sliding scale in the House bill for those with incomes up to $88,000 annually for a family of four and for those with incomes up to $66,000 in the Senate bill.

Doesn’t Medicaid already cover the poor?

In most states, including Nevada, Medicaid covers primarily low-income families with small children, pregnant women and some seniors. Under both bills, Medicaid would be expanded, including a new category for childless adults who make less than about $14,500 annually.

Will my Medicare or Veterans Affairs care change?

Medicare will not change, nor will coverage from the VA. But both the House and Senate bills would make cuts to Medicare Advantage, which is popular among seniors but costs the government more to run than standard Medicare. That would result in certain benefits from Medicare Advantage being trimmed.

What will all of this cost?

The cost over 10 years of the House bill is estimated at $1 trillion, the Senate bill at $900 billion. Those costs come primarily from providing health coverage to people who are currently uninsured via subsidies, small-business tax credits and Medicaid expansion.

How will this be paid for?

Both bills would raise money through spending cuts and tax hikes. The House and Senate would both raise money by reducing Medicare costs, primarily by changing the way doctors and hospitals are paid and combating waste, fraud and abuse with stiffer fines.

The House bill would also impose new taxes on high-wage earners. The Senate bill would impose new taxes on employees with high-end health care plans, and on the insurance industry.

Will I have to pay new taxes for this?

That depends on your income. New taxes will fall mostly on those with high incomes. Under the House bill, families with incomes above $350,000 ($280,000 for individuals) would pay a new tax. The tax would be progressive, meaning it would rise with income — from 1 percent on family incomes above $350,000, 1.5 percent on incomes above $500,000 and 5.4 percent on incomes above $1 million.

Under the Senate bill, a new tax would be imposed on employees who receive so-called Cadillac insurance plans from their jobs which, like all employer insurance plans, are tax free. The Senate bill would put a 35 percent tax on every dollar of plans valued above $21,000 for families ($8,000 for individuals).

Also, the Senate plan reduces the tax shelter for Health Savings Accounts to $2,000.

Will small businesses have to provide insurance?

Companies would either provide insurance for their workers or pay a fee. In the Senate, companies with fewer than 50 employees could join the exchange. In the House, the number is smaller (10 workers in the first year of the program, 20 in the second), but Democratic Rep. Dina Titus succeeded in offering a committee amendment to boost the threshold to 50 employees.

What if small businesses cannot afford to provide health insurance?

Tax credits would be offered to help small businesses pay for health insurance for their workers. The House bill offers credits for 50 percent of health care costs to businesses with fewer than 10 employees, with the credit phasing out for companies with up to 20 employees or average wages of up to $40,000. The Senate bill initially offers a credit of 35 percent for employers with fewer than 25 employees and average wages below $40,000, then offers a credit of up to 50 percent once the exchange is operating.

Will companies have to pay new taxes?

Companies that do not provide insurance would pay new taxes or fees. The House bill would establish a new payroll tax that would rise to 8 percent on businesses making above $400,000. Companies making below $250,000 would be exempt.

The Senate bill would charge up to $400 per employee not covered at companies with more than 50 full-time workers.

Will the health care industry pay new taxes?

The Senate bill would levy new taxes on pharmaceutical companies ($2.3 billion), medical device manufacturers ($4 billion) and insurance companies ($6 billion).

Will the plan allow illegal immigrants to receive government insurance?

The House bill specifically states: “No Federal payment for undocumented aliens.” The Senate framework states: “No illegal immigrants will benefit from the health care tax credits.”

Republican Rep. Dean Heller is among those who believe illegal immigrants would slip into the system with forged identity cards. He offered an amendment to require citizenship verification, but it failed in committee.

Federal law for the past 20-plus years requires hospitals to accept emergency room patients regardless of immigration status.

Will this allow federally funded abortions?

A House amendment approved in committee reads: “Abortion coverage prohibited as part of minimum benefits package.” It allows federal funding for abortions under existing law, which is in the case of rape, incest or threat to the mother’s life. It prohibits funding in other circumstances.

What about medical malpractice reform?

Neither the House nor Senate legislation deals with tort reform. But the president believes “defensive medicine may be contributing to unnecessary costs.” Last week he launched demonstration projects which had been considered by the Bush administration to evaluate the issue.

Will this plan end up covering those who are uninsured?

The CBO initially estimated the number of uninsured would decline to 23 million, but said an expansion in Medicaid (which is now under consideration in the Senate plan) would reduce that number further.

What will be the effect on the federal deficit?

The CBO believes health care costs, without reform, are skyrocketing at an unsustainable rate and threatening the federal budget. However, early assessments by the CBO indicated the bills moving through Congress would not substantially lower the costs. The CBO suggested further measures could rein in costs, including the tax on high-end health plans now in the Senate proposal. The CBO is expected to release a new assessment shortly.

What happens now?

After the president’s address last week, congressional Democrats appeared re-energized to achieve health care reform, while Republicans seem equally enthusiastic about fighting it.

A final bill remains a long way away.

Five bills in Congress are pending. The House expects to merge its three bills and take them to the floor. The Senate expects to take its bills to the floor in three weeks. Senate Majority Leader Harry Reid hopes to have a bill through the Senate by Thanksgiving.

The House and Senate bills will need to be merged before final passage.

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