President's Proposal

Conner Strong's Overview of the President's Proposal 

On Tuesday, February 22, 2010, the President issued his own proposal for reforming health insurance. This comes on the heels of the debate that went on for much of 2009 and culminated in both the House and Senate passing competing plans. The process was stalled after the Democrat's filibuster-proof majority was eliminated with the election of Senator Brown from Massachusetts (R) who replaced the late Senator Edward Kennedy.

After weeks of internal policy meetings at the White House, the President crafted his own health insurance reform plan that is intended to help stimulate the debate on the issue. The President's proposal takes popular provisions from both the House and Senate bills and merges them into a new package that presumably could pass the more liberal House and more moderate Senate. On Thursday, February 25th, the President and Republican leaders will participate in a live televised summit on the healthcare issue. With the President's issuance of his own plan, he has positioned himself as "coming to the table" with something for the minority party to discuss and possibly work with. It is unclear if the President has garnered enough support within his own party to back his new compromise bill since Democratic leaders in the legislature are still studying his proposal in more detail. Based on the President's plan as published by the White House, below is an executive overview of the primary features of his plan:

Highlights of President Obama's Health Care Plan:

• The cost of the plan is estimated to be $950 billion presumably over 10 years. It will be paid for with a series of new taxes and cuts to Medicare.
• The proposal creates a new federal "Health Insurance Rate Authority" to provide federal assistance and oversight over the states in conducting reviews of what the plan calls "unreasonable rate increases" and other unfair practices of insurance plans. The details and full reach of the Authority are unclear but this is one of the more pronounced new features added by the President.
• The proposal includes a national exchange for purchasing health insurance but without the controversial "public option". This feature resembles the Senate's plan.
• Pre-existing conditions exclusions would remain prohibited and all Americans would need to carry health insurance by set dates or pay penalties to the government.
• The President's plan eliminates the controversial proposal added to the Senate bill that exempts Nebraska from paying increased Medicaid expenses. It also provides additional federal financing to all of the states for the Medicaid expansion. In its place, the plan includes a uniform 100% federal support for all states with newly eligible individuals from 2014 to 2017, with decreasing amounts of federal support in subsequent years.
• The proposal would gradually close the "donut hole" in Medicare's Part D prescription drug coverage for seniors. Under current Medicare limits, seniors must pick up the costs once their drug costs reach $2,830 and pay all costs out of pocket until they reach $4,550 at which point Medicare coverage resumes.
• The plan would establish a new comprehensive Medicare and Medicaid sanctions database to provide a central location for information on health care providers, suppliers and related entities that have been sanctioned by the government.
• States will be allowed to expand Medicaid eligibility to more families starting in April 2010. Medicaid eligibility would extend to even more adults starting in 2014. The plan also eliminates special Medicaid deals provided to specific states under the Senate bill.
• Regarding the so-called "Cadillac Tax," the President's proposal increases the threshold for the excise tax for health plans from $23,000 for a family plan to $27,500.
• On the issue of tax credits and incentives the President's proposal increases federal subsidies to help lower income people buy insurance. New health insurance subsidies would be provided to families making up to 400% of the federal poverty level. Compared to the Senate's bill, the President's plan lowers premiums for families making between $44,000 and $66,000. Compared to the House bill, it lowers premiums for families making between $55,000 and $88,000. The President's plan also provides more cost-sharing assistance than the House and Senate bills for families with incomes below $55,000. The President's plan also provides $40 billion in tax credits for small businesses to help them provide health care for their employees.
• As it relates to penalties for not having insurance, the House and Senate bills both penalize individuals who do not get health care coverage. The President's plan lowers the maximum penalty for individuals. Like the Senate bill, the president's proposal does not mandate that employers provide insurance. Under the President's plan, companies with more than 50 employees would be required to pay a fee of $2,000 per worker if the company does not provide health insurance coverage and any of that company's workers receives federal health care subsidies. The first 30 workers would be subtracted from the payment calculation. This represents a compromise between the House and Senate plans where the House has a penalty based on payroll and the Senate has a penalty of $750 per employee.
• The President's plan also delays the $67 billion assessment on health insurers planned by the Senate, pushing it to 2014 when state exchanges and the new health insurance markets will be set up.

Click here for more details of the President's proposal.