Health Care Overhaul: What's in It for the People?

Dec. 22, 2009— -- The health care debate has been centered in Washington, D.C., but it entails a massive overhaul that would affect nearly every American.

The Senate and House have their own versions of the health care bill. Both are similar in principle but differ widely in important aspects, such as whether there should be the option of a government-run insurance plan that would compete with private insurers, abortion language and how to pay for the legislation. When senators pass their health care legislation, it will have to be reconciled with the House bill in the conference committee. Each chamber has to approve the exact same health care bill, with simple majorities, before sending it to the president.

Democratic lawmakers still have a long way to go in finding a common ground. Some senators have said they would be unwilling to accept further changes in the conference committee, but House members are also holding their ground.

"It's unacceptable," Rep. Bart Stupak, D-Mich., said of the Senate bill. "My colleagues and I have great differences with that language."

Stupak's amendment to include tougher restrictions on federal funding for abortion was passed in the House, but the Senate version is relatively less restrictive. Stupak today said it's not the abortion language alone that he disagrees with: It's also that certain states would get preferential treatment when the bill was meant to improve health care coverage for Americans.

"I will not vote for the Senate bill regardless of the abortion language," Stupak told ABC News, referring to the concessions provided to senators for their support. "I think it sends a bad message."

Even as some senators are unwilling to budge, the Michigan Democrat is hopeful the differences can be resolved.

"I remain optimistic that we can work this out," Stupak said.

President Obama, who was scheduled to leave for Hawaii for the holidays Wednesday, today said he would not begin his vacation until the Senate has finished its work on the health care bill.

"I will not leave until my friends in the Senate have completed their work," he told reporters. "My attitude is that if they're making these sacrifices to provide health care to all Americans then the least I can do is be around to provide them any encouragement and last-minute help where necessary. That's the deal."

The Senate is hoping for a final vote on the passage of the health care bill by Christmas Eve, if not earlier.

"The finish line is in sight," Senate Finance Committee Chairman Max Baucus, D-Mont., said today at a news conference. "We're not the first to attempt such reforms but we will be the first to succeed."

The House passed its version last month.

Here is a look at some of the key components of the House and Senate health care bills and their potential impact:

Mandatory Insurance

For the first time ever, Americans would be required to carry health insurance. Both bills would require people to do so, and provide subsidies to low- and middle-income families who cannot afford it.

Under the Senate plan, families who make less than $88,200 would be eligible for Medicaid. There are also sweet deals for some states.

Nebraska, the state of once-skeptical Democratic Sen. Ben Nelson, would be exempt from paying for Medicaid's expansion, a gift worth $100 million, under the Senate plan. Sen. Patrick Leahy, D-Vt., also negotiated $600 million in additional Medicaid benefits for his state over 10 years, and Massachusetts would get $500 million in Medicaid help. Louisiana would get $100 million in 2011 from the federal government for Medicaid.

The Senate plan also designates $10 billion for new community health centers.

Both bills also call for the creation of exchanges, an insurance marketplace where the uninsured, small businesses and self-employed people can compare prices and plans.

Insurance Industry Changes

Both House and Senate bills aim to implement a sweeping overhaul in the health insurance industry. Insurance providers would not be able to deny coverage based on pre-existing conditions. Parents would be able to keep their children on their insurance plans until they are much older, the ceiling is 25 in the Senate bill and 26 in the House legislation.

The bills also aim to improve prescription drug coverage.

Insurance companies would be required to spend as much as 85 percent of their revenue on health services, up from 70 percent, and will face a bevy of new taxes.

Medicare

One way to keep the cost of the health care bills down would be by implementing cuts in Medicare. But experts say Medicare recipients would not see any difference in their benefits or coverage.

Some Republicans charge that the Senate bill would cut extra benefits from private Medicare Advantage plans, which offer better coverage than the standard Medicare program. Republicans have seized on the fact that about 800,000 seniors in Florida will be exempt from the cut to appease the state's Sen. Bill Nelson.

Taxing Cadillac Plans

Both House and Senate bills would expand subsidies to poor Americans, although the nature of the two differ slightly. Both would also impose a tax on higher-income individuals and families as a way of cutting the costs of the bills.

The Senate bill is estimated to cost $871 billion in the next 10 years while the House legislation would total nearly $1 trillion over the same time period.

Senate Democrats have included in their bill an excise tax for so-called "Cadillac plans," high-value, generous insurance packages that include luxuries such as no co-payments and deductibles. Such plans are often sold to companies with older workers and high-risk employees and which, some people say, are big cost drivers. Under the Senate plan, insurance plans whose premiums are more than $8,500 for an individual and $23,000 for a family would be subject to a 40 percent tax.

The plan drew ire from the union groups, many employees of which often negotiate lower salaries in exchange for better health care coverage. Some House Democrats are also opposing it for that reason.

There is also an additional tax on the wealthy in the Senate bill. Under that plan, there would be a 2.35 percent Medicare payroll tax on individuals who make $200,000 a year and couples who make more than $250,000.

The Senate bill initially imposed what came to be called the "botox tax" on elective cosmetic surgery, but the final version instead includes a new 10 percent tax on the tanning industry.

But some insurance companies in Nelson's home state of Nebraska would be exempt from new taxes.

The House, on the other hand, does not include a tax on "Cadillac plans" but it does impose an income tax on the wealthy. Under the House plan, there would be a tax surcharge of 5.4 percent on income in excess of $500,000 in the case of individuals and $1 million for families.

Abortion

Abortion is likely to be the key point of contention between Democrats in the Senate and the House when they try to reconcile the different bills.

Democrats in both chambers have been deeply divided over abortion language in the health care legislation. The House bill includes an amendment by Michigan's Stupak, which takes federal funding restrictions for abortion further with new language that cuts access to abortions for people who receive federal subsidies and those who purchase insurance through the health insurance exchange. It also bans insurance companies participating in the exchange from offering abortion services.

Stupak today stood firm that the abortion language he proposed, and that passed the House, is built upon language in recent bills and should be included in the final health care bill.

"We plan on keeping the amendment we had and we've had good conversations with White House officials," Stupak said. "We haven't reached a common ground."

While the Senate toughened the language on abortion in its bill during closed-door negotiations, it has less restrictive language on abortion. In that version of the health care bill, states would have the option of banning coverage in insurance plans brought in insurance marketplaces.

Democratic leaders in the House would be happy to concede to the Senate version -- liberal members of the party were unhappy with the abortion language inserted in the bill -- but Stupak told ABC News last week he will not vote for a bill that does not include his language. There are several anti-abortion Democrats in the House who insist on this as a condition to pass the bill.

"Our members are holding, so we will not pass if they are putting anything but a version of our language," Stupak said.

Public Option

The Senate plan does not include the option of a government-run insurance plan, a thorny issue among Democrats. The plan initially had a public option in which states would have had the choice of whether they wanted to participate. But Democratic leaders did away with that provision to appease lawmakers such as Nelson and independent Sen. Joe Lieberman of Connecticut.

The House health care bill, however, includes a public option in what becomes one of the biggest health care policy differences between the two bills.

Under the House's public option plan, the government would negotiate rates with insurance companies instead of setting fees, as it does in Medicare.

At least 50 Democrats in the House are on the record as saying they will not vote for a bill without this option while Nelson and Lieberman have refused to support a bill that does include a public option.

Obama Monday tried to downplay the differences over the public option, saying that debate is not the most important aspect of the bill.

"This is an area that has just become symbolic of a lot of ideological fights. As a practical matter, this is not the most important aspect to this bill -- the House bill or the Senate bill," the president said in an interview with American Urban Radio Networks, adding that "the Senate and the House bills are 95 percent identical."

Obama, who had initially pushed for a public option, spoke of the plan in the past tense.

"It was only going to apply to a few million people who were buying into the exchange," Obama said. "So it wasn't like suddenly everybody would just go out there and buy a government-run plan; most people will still get health insurance from their employers. What will happen is, is that if you don't get health insurance through your employers, you can then go to this what we're calling a health care exchange, get a subsidy and buy health insurance through that exchange."