What health care reform will cost consumers

  • With few exceptions, Americans will be required to have insurance.
  • Penalties would be imposed on those who don't carry any insurance.
  • Plans sold on the exchanges would range from Bronze to Platinum.

If you've seen the news coverage lately on health care reform, you probably know that the recently passed Senate bill differs from the House bill on at least two hot-button issues: The Senate measure has been stripped of the controversial public option, and it has somewhat lower restrictions than the House version on abortion coverage.

While the White House and congressional Democrats are hewing more closely to the Senate version as they hammer out the differences, in many areas the bills basically agree.

"If you strip away a lot of the controversial stuff, I think the bills are 80 percent or so the same," says Stuart Altman, professor of national health policy at Brandeis University.

For instance, both the House and Senate versions of the bill would prohibit exclusions for pre-existing conditions and lifetime limits on the dollar value of coverage. They also would create a new, more regulated marketplace called the Exchange, where individuals and small employers would shop for health insurance.

Like its House counterpart, the Senate bill requires nearly all U.S. citizens and legal residents to buy health insurance. Penalties would be phased in over three years starting in 2014, with steadily increasing amounts applied. For example, in 2014 it would be $95 or 0.5 percent of income, whichever is greater. By 2016, the penalty would be either $750 to $2,250 a year per family or 2 percent of household income, whichever is greater.

More exemptions, less affordability

The Senate bill echoes the House version in allowing exemptions for purchase of insurance due to financial hardship, religious objections and low income. But it also exempts American Indians, those who go without coverage for less than three months, people who are incarcerated and those with no available plans costing 8 percent of their income or less.

The Senate bill also follows the House version in subsidizing the cost of insurance premiums and benefits for low-income workers, while using slightly different formulas to determine who is eligible for help.

"The House has much stronger affordability protections for people who are low income, and the Senate does a little bit better for those who are more in the moderate income ranges," says Jocelyn Guyer, co-executive director of the Center for Children and Families, part of the Health Policy Institute at Georgetown University.


Set on a sliding scale, the Senate's premium subsidies would ensure that those earning 100 percent to 133 percent of the federal poverty level would pay no more than 2 percent of their income for health insurance premiums. The FPL is $10,830 for individuals; $22,050 for a family of four. People making 300 percent to 400 percent of FPL would pay no more than 9.8 percent of their income.

Federal cost-sharing subsidies -- which go directly to insurers to pay consumers' benefit costs -- would cover 90 percent of a plan's benefit costs for individuals and families earning 100 percent to 150 percent of FPL. Cost-sharing subsidies for those earning 150 percent to 200 percent of FPL would cover 80 percent of benefit costs. By contrast, the House bill provides cost-sharing subsidies for individuals and families earning up to 400 percent of FPL.

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