On February 22, President Obama released an 11-page health reform proposal to illuminate the Administration’s way forward on comprehensive health reform and to provide a starting point for discussions at the President’s bipartisan health care summit later that week. The proposal is intended to bridge the differences between the Patient Protection and Affordable Care Act passed by the Senate and America’s Affordable Health Choices Act of 2009 passed by the House of Representatives, but is based largely on the Senate reform bill which would need to be amended to achieve the President’s objectives. The President’s proposal also includes a few new ideas borrowed from Republican lawmakers. Overall, the President’s health reform package – i.e., the Senate bill, as amended by the President’s modifications – is estimated to cover more than 31 million Americans and estimated to cost $950 billion over 10 years. However, the cost of the President’s package would be offset by spending cuts and tax increases and is supposed to reduce the federal deficit by approximately $100 billion over 10 years.

The President’s health reform proposal, when viewed in relation to the Senate health reform bill, is intended to accomplish the following:

  • Increases federal subsidies to help families with annual incomes below $55,000 pay for health insurance.  
  • Increases tax credits for families with modest incomes to help defray out-of-pocket amounts which they pay under their health insurance (e.g., deductibles, co-payments and amounts in excess of covered benefits).  
  • Increases tax credits to small businesses to help them purchase insurance and reduces penalties payable by smaller employers which do not offer health insurance.  
  • Increases funding to community health centers to $11 billion for services and construction.  
  • Lowers the penalties which individuals pay if they fail to maintain mandated health insurance.  
  • Prevents brand pharmaceutical companies from entering into “pay-for-delay” deals that keep generic equivalent drugs off the market for a longer period of time.  
  • Delays the onset of the 40 percent excise tax on high value “Cadillac” health insurance plans and increases the threshold on plans which may be taxed.  
  • Increases or alters fees on health insurers, pharmaceutical companies and medical device companies, but delays their implementation.  
  • Imposes a 2.9 percent Medicare tax on passive income (e.g., income from interest, dividends, royalties and rents) received by high wager earners.  
  • Restructures payments to Medicare Advantage plans by gradually phasing in benchmark payments based on a particular area’s Medicare fee-for-service costs, and provides bonuses for quality and member satisfaction.  
  • Closes the Medicare Part D donut hole.  
  • Eliminates the special Nebraska Medicaid deal and provides 100 percent federal funding to the states for newly eligible Medicaid beneficiaries.  
  • Expands measures to reduce waste, fraud and abuse.