Differences Remaining in House and Senate Approaches

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While the broad contours of the health reform bills under consideration in the two houses of Congress are the same, stark differences remain in some important particulars of the approaches adopted by the House and under debate in the Senate. If the Senate succeeds in passing a bill, the Congressional Democratic Leadership faces a formidable task in resolving these differences as it seeks to send health reform legislation to the President early next year.

• Public Plan. The bill adopted by the House and the original legislation brought by Majority Leader Harry Reid (D-NV) to the Senate floor would create a national public plan overseen by the Secretary of Health and Human Services (HHS), who would negotiate provider rates. Under both bills, these rates could not exceed the average rates paid by other Exchange plans; the House bill also requires that payment rates be no less than Medicare rates. After several key members of the Senate Democratic caucus rejected the Majority Leader’s public plan proposal, a small group of Senators negotiated a compromise that was unveiled with great fanfare last week. Under the compromise, there will be no public, government-run plan. Instead, two national plans would be offered by private insurance companies under the supervision of the federal Office of Personnel Management (OPM) (which oversees the federal employees’ health plans). With OPM negotiating premiums, and a national risk pool, it is hoped that these plans would provide an affordable choice akin to what the public option was designed to accomplish. In addition, in a proposal strongly opposed by provider groups that object to Medicare rates, the deal would allow individuals ages 55-64 to buy into Medicare as an alternative to purchasing a private plan.
  
  
• Coverage Mandates and Subsidies. The House bill requires employers to provide coverage and assesses a fee equal to 8% of an employer’s payroll on employers who fail to do so. In contrast, the Senate bill contains no such mandate, instead requiring employers to pay a capped per employee fee of up to $400 for only those employees receiving a tax credit to purchase Exchange coverage. While there has been little disagreement over the individual mandate contained in each bill, the amount of subsidies provided to purchase coverage is likely to remain a sticking point. The House-adopted bill provides more generous subsidies to low-income individuals and families than the bill currently under debate in the Senate.
  
  
• Medicaid Expansion. Both the House and Senate bills would significantly expand the Medicaid program—the House bill requires states to cover individuals with incomes up to 150% of the federal poverty level (FPL) while the Senate bill requires coverage up to 133% FPL. Although the House bill imposes greater coverage responsibilities on the states, the House bill also provides more generous federal matching payments to assist states to meet these responsibilities, including extending for an additional six months the enhanced Medicaid matching rate that states received under the American Recovery and Reinvestment Act.
  
  
• Immigrant Access to Coverage. Both the House and Senate bills strictly prohibit the provision of health insurance subsidies to undocumented immigrants. The House bill, however, goes a step further by prohibiting such immigrants from using their own funds to purchase coverage through a health insurance exchange.
  
  
• Effective Date of Coverage Expansion. Notably, the coverage expansion provisions take effect one year earlier under the House bill—in 2013—than under the Senate bill, which does not establish a health insurance exchange or expand Medicaid until 2014. With the next presidential election occurring before coverage is extended under either version, the effective date of the coverage expansion could have significant political implications for President Obama.
  
  
• Medicare Payment Reform. The House and Senate bills each would adopt extensive Medicare payment reforms, the most significant of which would require the Secretary of HHS to adopt on a fast-track basis Medicare payment reforms recommended by an independent body. The House charges the Institute of Medicine with the task of developing such policies, while the Senate bill would establish a new Medicare Independent Advisory Board for this purpose. The Senate provision would extract more savings from the Medicare program by requiring the Board to achieve specified savings targets. Additionally, under the Senate bill, if Congress rejects the Board’s policy proposals, Congress must adopt legislation to achieve the savings targets. The Senate bill also would achieve Medicare payment reform through the adoption of value-based purchasing in Medicare, a policy not adopted by the House.
  
  
• Abortion. Access to abortion services has become a flash point in the health reform debate. The House bill specifies that individuals who receive federal subsidies to purchase a plan through an exchange may not choose plans that cover abortions for which federal funding is prohibited. In contrast, the Senate bill permits plans participating in an exchange to cover abortion services for subsidized individuals as long as no public funds are used to pay for these services.

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