insurance

What health care reform will cost consumers

Consumers would get premium subsidies in the form of tax credits. Annual premium costs vary by age. As an example, a 40-year-old individual would pay the following amounts, assuming a $3,500 annual premium, according to the Kaiser Family Foundation:

Cost of $3,500 premium to consumer
If you earn:$20,000$25,000$30,000$35,000
You would pay:
House version
$947$1,739$2,724$3,500
You would pay:
Senate version
$1,153$1,845$2,699$3,430

The above figures apply only to those without employer-based coverage. Under this scenario, the House bill would not subsidize premiums for individuals earning above $34,023; the Senate bill would pay nothing for those earning more than $35,709. Note that this information does not reflect federal cost-sharing subsidies or out-of-pocket expenses for deductibles and co-insurance.

Structure of exchanges

Both bills call for creating insurance exchanges, but the Senate bill would have them set up at the state level rather than by the federal government. Separate exchanges would be created for individual consumers and small businesses. Each exchange would be administered by a government agency or nonprofit organization, and at least one plan in the exchange would have to come from a nonprofit insurer.

Plans sold on the exchanges would fall under four benefit categories, from Bronze at the minimum level to Platinum at the highest. A separate catastrophic plan would be offered to those ages 30 and under and those exempt from the individual mandate. An optional state-run Basic Health Plan could be provided for uninsured people earning 133 percent to 200 percent of FPL who would otherwise qualify for premium subsidies. Those who purchased Basic Health Plans would not get the subsidies.

No employer mandates

Employers would not be required to provide insurance, but those with more than 50 employees would have to pay $750 per full-time employee if they don't offer coverage and if they have at least one full-time employee who receives a premium subsidy through an exchange.

Employers that offer health care insurance would have to provide free-choice vouchers to employees who earn less than 400 percent of FPL, whose premium share is more than 8 percent but less than 9.8 percent of their income, and who opt to enroll in a plan in the exchange instead of the company's plan. Guyer says one of the biggest challenges of this provision is figuring out exactly how it is meant to work.

"I've read it once or twice, and it's still hard to understand," she says. "From a consumer perspective, there are probably issues around the feasibility of making it accessible and something that people understand and can use."

Cadillac plans

Another much-discussed aspect of the Senate bill is its tax on so-called Cadillac plans. Employer-sponsored plans valued at more than $8,500 for individual coverage and $23,000 for family coverage would be assessed a tax equal to 40 percent of the excess value amount. Designed to incentivize insurers to keep their costs down, the tax is a major part of the plan to pay for the bill, estimated at $871 billion over 10 years.

Whatever shape the final health care reform bill takes, Altman says its passage won't be the end of the story.

"I don't think health care reform is done," he says. "We're going to have Phase II, not only because not everyone will be covered but because not enough has been done to contain health care costs."

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