The Treatment

The Benefits Tax Compromise and Other Highlights

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The White House has published President Obama's proposal for a House-Senate compromise on health care reform. You can download the official summary here. More material is available at the White House website.

To be clear, Obama is not introducing an entirely new health care plan or even a mostly new health care plan. In fact, strictly speaking, he's not introducing a health care plan at all. He is, instead, proposing a set of changes to the bill that the Senate passed in December. If both chambers pass these changes--and if the House passes the Senate bill--health care reform will become law.

There aren't too many new wrinkles. Probably the most interesting is a proposal, first reported last night, that would give the federal government more authority to regulate premiums on policies sold directly to individuals. Otherwise, the proposed compromises do more or less what everybody expected: They eliminate the most egregious legislative deals; they improve the coverage, consumer protection, and affordability provisions to make the Senate bill look more like the House option; and they raise a bit more money, again borrowing from the House bill.

Taken as a whole, health care reform as Obama now envisions it would still pay for itself. It would spend a little more but it would also raise a little more, in the form of taxes on offsetting savings.

Here are some highlights, in addition to the ones reported earlier.

The Benefits Tax: By far, the biggest substantive divide between the House and Senate bill was on financing, since the Senate bill placed a tax on benefits and the House bill did not. In January, congressional leadership had agreed with the White House to modify the Senate tax, so that it would have a higher threshold and so that collective bargaining plans had a few extra years of exemption, on the theory that unions needed more time to adjust their contracts. But critics attacked that deal (not unreasonably) as a special interest giveaway. So now the White House is proposing simply to delay implementation for everybody, rather than union plans alone. This means collecting less revenue in the first decade. But it doesn't mean sacrificing the tax's projected ability to control costs, which is what economists, including the ones who work at the Congressional Budget Office, care about.

Affordability: The House bill offered more assistance to low-income people buying coverage through the insurance exchanges. Obama is proposing to improve the Senate's financial assistance, so that it more closely approximates the House's numbers.

The Donut Hole: Relative to the Senate bill, the House bill offered more prescription drug relief for seniors, filling in more of the "donut hole" in Medicare Part D coverage. Obama would like the final bill to do the same as the House bill.

Medicare Advantage Plans: The Medicare program famously pays private insurers serving beneficiaries too much money, at least in eyes of most experts. The Senate bill sought to reduce those payments, but the House bill sought to reduce them more. Obama would move the number closer to the House's.

Consumer Protections: In general, the House bill applied consumer protections to all insurance plans, while the Senate bill left many of them exempt. Obama would like the final reform bill to use the House model.

 

 

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