Senate Passes Health Care Reform Bill on Christmas Eve

The Senate has finally passed a health care reform bill, after months of heated debate. The $871 billion plan, according to a CNN article by Alan Silverleib, must now be merged with a $1 trillion House bill passed in November, which should provide the president with a bill to sign before his 2010 State of the Union address.

The two bills share some commonalities. From the article:

Among other things, the House and Senate have agreed to subsidize insurance for a family of four making up to roughly $88,000 annually, or 400 percent of the federal poverty level.

They also have agreed to create health insurance exchanges designed to make it easier for small businesses, the self-employed and the unemployed to pool resources and purchase less expensive coverage. Both the House plan and the Senate bill would eventually limit total out-of-pocket expenses and prevent insurance companies from denying coverage for pre-existing conditions.

Insurers would also be barred from charging higher premiums based on a person’s gender or medical history. However, both bills allow insurance companies to charge higher premiums for older customers.

Medicaid would be significantly expanded under both proposals. The House bill would extend coverage to individuals earning up to 150 percent of the poverty level, or roughly $33,000 for a family of four. The Senate plan ensures coverage to those earning up to 133 percent of the poverty level, or just over $29,000 for a family of four.

One of the issues disagreed upon most strenuously by the two bodies of Congress is how to pay for the plan:

The House package is financed through a combination of a tax surcharge on wealthy Americans and new Medicare spending reductions.

Specifically, individuals with annual incomes over $500,000 — as well as families earning more than $1 million — would face a 5.4 percent income tax surcharge.

The Senate bill also cuts Medicare by roughly $500 billion. But instead of an income tax surcharge on the wealthy, it would impose a 40 percent tax on insurance companies that provide what are called “Cadillac” health plans valued at more than $8,500 for individuals and $23,000 for families.

The article points out that the president predicts the final bill will include a little of both proposals.

Another major divide is that the House bill includes a public option, but the Senate bill does not — instead, it includes nonprofit private co-ops overseen by the government.

Both bills would penalize those who do not purchase coverage.

The House bill would impose a fine of up to 2.5 percent of an individual’s income. The Senate plan would require individuals to purchase health insurance coverage or face a fine of up to $750 or 2 percent of his or her income, whichever is greater. Both versions include a hardship exemption for poorer Americans.

Businesses would also see an even greater penalty under both plans.

As for now, we can only sit back and wait as the House and Senate fight it out for a final bill of reform, and see whether it meets with any other roadblocks.