Overall, the changes in the reconciliation bill will make the Senate
bill more progressive—and fairer.
My prediction: the bill will
pass. Those who oppose universal coverage are becoming
angrier, louder, more abusive, and more frantic. This is because they realize
that they are losing, and now they are just flailing about.
evening (Thursday) I heard Bart Stupak acknowledge, on “Hardball
with Chris Matthews”, that while the Democrats may not have the
votes today, by Sunday, they could well have them. On this, I agree
Below, the details of the new bill, and my comments
Under the new reconciliation bill:
- Low-income and middle-income families will have an easier time
affording premiums. The tax credits for health insurance premiums
are more generous for individuals and families with incomes between 250%
and 400% of the federal poverty level (FPL)—i.e. individuals earning
less than $41,500, or a family of three earning less than $70,400. When
compared to the Senate bill, the legislation also cuts cost-sharing for
individuals and families with incomes between 100% and 250% FPL.
Comment: Research shows that when a low-income
family of four (for instance a family earning less than $22,000) is
required to share in health care costs, too often they delay needed
care. For these families, even a $15 co-pay can be a barrier. Fifteen
dollars will buy groceries for two dinners for a family of four (e.g.
spaghetti with tomato sauce and bread). Middle-income families who
don’t have help from an employer also need the higher subsidies that the
new bill provides.
- Six months after the bill is enacted, all existing health
insurance plans are prohibited from imposing life-time limits on payouts
or refusing to cover children suffering from pre-existing conditions.
Excessive waiting periods before insurance kicks in also will be
banned, and insurers will be required to provide coverage for
non-dependent children up to age 26 on their parent’s polices. (Parents
will pay extra for the coverage, but adult children will get better
deals than many would on their own.) Beginning in 2014, group health
plans will no longer be able to exclude adults based on pre-existing
conditions. Annual limits on how much an insurer will pay out will be
restricted beginning six months after enactment, and prohibited starting
Comment: Limits on how much insurers will pay out
annually or over a lifetime can condemn individuals to death. If you
have the bad luck to be diagnosed with a very expensive disease that
might require years of pricey treatments (MS for example, or childhood
cancers) your insurance can easily “max out”—even though treatment that
might cure you (in the case of some childhood cancers where we have been
making great progress)– or at least give you many additional years of
- The “Cadillac Tax” on expensive health insurance plans has been
pushed back five years and won’t go into effect until 2018. The
thresholds also have been raised: the tax will apply only to individual
plans that cost $10,200 or more (up from $8,500) or family plans that
fetch $25,500 (up from $23,000). Dental and vision plans would not be
included. Under the new bill, there is no special deal for unions.
Comment: In my view, this is a positive change.
As I have argued in the past, the Cadillac tax could hit middle-income
- While the Cadillac tax is rolled back, the Medicare tax for
wealthy individuals earning over $200,000 and married couples who earn
over $250,000 rises. Today, they pay a 1.45% payroll tax on wages.
The Senate bill would raise that tax to 2.35%. The reconciliation bill
expands the tax to include investment income (dividends, capital gains,
etc.) as well as earned income. It still applies only to individuals who
show income over $200,000 and couples who report income over $250,000.
Comment: This tax makes up for the cut-back and
push-back on the Cadillac tax. In contrast to the Cadillac tax , this
tax is limited to those at the very top of the income ladder. Unlike the
middle-class, those earning over $200,000 have enjoyed significant
tax breaks and income hikes in recent years. They are in a much better
position to afford the increase. It’s worth noting that other countries
tax investment income to help fund healthcare.