insurance

How the health reform bill would affect you

Structure of the plan

The House bill would create a National Health Insurance Exchange where individuals and small employers would compare and purchase insurance plans. The Exchange could be opened to large employers at a later date.

All plans offered through the Exchange would include an essential benefits package defined by a panel of health experts, and they would be standardized to fit under basic, enhanced and premium categories. Insurance plans sold outside the Exchange, except certain existing plans that would be grandfathered in, would also have to provide at least the essential benefits package.

No provision of this bill has generated more buzz or heat than the inclusion of a government-run plan in the proposed Exchange. Popularly known as the public option, this plan would be administered by the Department of Health and Human Services, which would negotiate the rates paid to doctors and other health care providers. The rationale behind the public option is to increase market competition and generate a downward pressure on insurance costs, proponents say.

"We have states that have one or two carriers in the marketplace, and there's no real competition," Libster says. "A public plan will create additional options for people in these smaller market states. In addition, it will create competition in the larger markets because you will have an insurance carrier that's not operating for profit and will be operating, in theory, more to provide health benefits to people without thinking about the bottom line first."

Only those without access to employer-sponsored coverage or other public plans such as Medicare, Medicaid or veterans health benefits would be eligible to select the public option.

Help for lower income consumers

People with incomes at 400 percent of the federal poverty level ($88,000 for a family of four) or below would get subsidies to help them buy insurance. Set on a sliding scale, these government-sponsored premium credits would limit the percentage of income used to pay for insurance. Those earning 133 percent to 150 percent of the federal poverty level, or FPL, would pay no more than 1.5 percent to 3 percent of their income for health insurance; those earning 350 percent to 400 percent of FPL would pay no more than 12 percent of income. This provision would primarily affect people buying their own individual or family coverage through the Exchange, although those with access to employer-based coverage would also be eligible for the subsidy if their share of the premium cost exceeded 12 percent of their income.

The bill caps out-of-pocket costs for medical care at $5,000 for individuals and $10,000 for families with incomes up to 400 percent of FPL.

Cost to higher income consumers

To help pay for its reform measures, the House bill would implement an additional 5.4 percent income tax on individuals earning more than $500,000 a year and couples earning more than $1 million.

It would impose new restrictions on flexible spending accounts, limiting contributions to $2,500 a year and banning their use for over-the-counter medications.

For a more extensive overview of this bill, the Kaiser Family Foundation's Web site offers a summary.

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