Health care reform is headed toward a historic milestone with a House vote expected as early as Saturday. Two significant endorsements, from AARP and the American Medical Association, were announced Thursday as momentum builds to make health care more available and affordable. It's important that the House send a strong message with its legislation, and it is equally important that congressional leaders continue to improve upon the details when the focus shifts to the Senate.
The House and Senate versions of health care reform both offer vital new protections for Americans fortunate enough to already have insurance. The proposals would cover millions of uninsured citizens and provide new ways to help low- and middle-income families pay for insurance. With some key caveats, the House plan offers the better approach.
The Congressional Budget Office estimates the House bill would cost $894 billion over 10 years and cover 36 million uninsured, about 7 million more than the Senate plan. In Tampa Bay, the House plan would give 631,000 uninsured people access to health insurance, and nearly 1.2 million families would receive federal subsidies to make insurance affordable. Remember the magnitude of that impact when Republican state legislators whine about the potential cost to the state in Medicaid money years down the road.
Both the House and Senate would require everyone to have health insurance. No one could be rejected for pre-existing conditions or lose coverage for getting sick. No one could be charged higher premiums due to illness. In addition, insurance subsidies would go to families with incomes of up to 400 percent of the federal poverty line, or $88,200 for a family of four. Medicaid would expand to cover more low-income Americans. And new health care exchanges would be established to encourage health insurance competition and comparison shopping for those not insured by their employer.
The House plan is significantly better than the Senate Finance Committee bill in two respects: There is a viable public option, and there are reasonable employer mandates.
The government would not set prices for the public option but would negotiate with providers like other private insurance plans. The health insurance industry doesn't want to compete with a public plan that concerns itself with coverage rather than profits. But a public option guarantees more choices for the uninsured and would put pressure on the private market to hold down premiums.
Most Americans get their health insurance on the job, and the House plan would continue that tradition. Employers with payrolls of $500,000 or more would be penalized if they didn't cover most of the cost of individual and family coverage. Penalties would be up to 8 percent of payroll, but the nation's small businesses would be exempt.
The Senate bill is weaker. It would require employers with more than 50 workers who do not offer health coverage to pay for federal subsidies employees receive. That approach is more likely to encourage employers to drop coverage and write a check.
But the Senate has the better plan to pay for health care reform — an excise tax on expensive health insurance plans that encourage the over-utilization of health care. The House would tax families making $1 million or more an added 5.4 percent, but that sort of general tax increase is going to be needed to more broadly reduce the federal deficit. The health care reforms should be paid for within the health care economy.
Another revenue source in both bills is a $2,500 per year cap on the amount individuals may contribute to flexible spending accounts, where money is put aside to pay for medical expenses with pretax income. There are no federal limits on those contributions now, although many company plans set limits.
The CBO estimates the House and Senate plans would pay for themselves without increasing the federal deficit. But the House will cover more uninsured and better regulate the private insurance market. The House should pass its bill and keep building the momentum.