Comparing and Contrasting the Two Health Care Bills in Congress

As we wait for Congress to decide the fate of health care reform, I think it is important to remember that the House of Representatives and U.S. Senate each passed different bills addressing the issue. Therefore, when debating health care reform, it is important to understand the similarities and differences between each bill.

Affordable Health Care for America Act

Back in November, the House of Representatives passed the Affordable Health Care for America Act of 2009. As I explained in this blog entry, the legislation included a public option that would take affect in 2013. If passed it would extend coverage to 96 percent of legal residents under the age of 65. In order to pay for the legislation, the House included a slew of tax increases including a 2.5% penalty tax for Americans who did not have establish health care coverage, an 8% penalty on businesses that do not provide their employees coverage, and a 5.4% surtax on couples making over a million dollars per year.

Patient Protection and Affordable Care Act

The Senate’s health care legislation (the Patient Protection and Affordable Care Act) has been making headlines more recently as it was voted on just a few weeks ago. It aims to extend coverage to 94% of legal residents, but does so without a public option. The legislation is expected to cost over $870 billion over the next ten years, but would actually reduce the federal deficit because of the tax increases it includes.

The Senate’s bill also includes a penalty for not buying into a qualifying insurance plan, but it would begin as only a 0.5% tax in 2014. It would gradually increase until reaching 2% in 2016. There would also be a mandate on employers, as well as a 40% tax on “Cadillac” health care plans, and a 10% tax on tanning services.

The Similarities

When looking at the tax implications of each bill, it is easy to see their similarities. Both include taxes on employers who do not provide health care coverage, as well as penalties on taxpayers who do not purchase a qualifying plan. They also both include new taxes on medical device manufacturers. Additionally, both health care reform bills ensure that anyone living in the country illegally would be barred from receiving government subsidies.

The Differences

Although they have a few similar tax implications, the two bills are significantly different. The House of Representative’s bill would cost nearly $1.2 trillion, and includes more aggressive tax increases to pay for the expensive legislation. The penalty on taxpayers without coverage is higher than the Senate’s and would take effect a full year earlier. The House’s bill also includes the massive 5.4% surtax on the wealthiest Americans, which is absent from the Senate’s legislation.

The bill passed by the Senate would only cost $871 billion over 10 years, which is significantly less than the House’s. Although their bill also includes penalties on taxpayers without insurance, it would only start at 1% in 2014, and then gradually increase to 2% in 2016. Even once the penalty reaches its full amount, it will still be less than the House’s penalty. Additionally, the Senate’s bill calls for a non-deductible fee of $750, per employee, for employers that do not offer coverage; this is higher than the 8% tax proposed the House’s bill. Finally, the Senate’s bill also creates two new taxes that were not even considered by the House, including a tax on “Cadillac” health plans, and a tanning tax that has actually gained support by the medical community.

Future of Health Care Reform

In order to present a bill to the President for his signature, the Senate and House will need to reconcile their legislation to come up with one unified bill that both chambers can agree on. However, it does not appear that this will be Congress’ first priority upon returning from their Winter break. According to reports, the Obama Administration is going to focus the first few months of the year on job creation, especially in the energy sector. However, Congress is expected to decide on health care reform in February, and experts predict that the House will likely accept all the compromises worked out in the Senate’s legislation.

Comparison of Democratic Health Care Bills

The United States Senate voted last week to debate their health care bill, the Patient Protection and Affordable Care Act. However, their legislation is significantly different than the bill passed by the House of Representatives a few weeks ago. To help anyone curious about the differences between the two Democratic bills, ABC News has put together this informative article. I’ve included a few sections about each bill, but be sure to checkout the full text here.

The Senate Democratic bill (Patient Protection and Affordable Care Act):

WHO'S COVERED: About 94 percent of legal residents under age 65 — compared with 83 percent now. Government subsidies to help buy coverage start in 2014. Illegal immigrants would not receive assistance.

COST: Coverage provisions cost $848 billion over 10 years.

HOW IT'S PAID FOR: Fees on insurance companies, drugmakers, medical device manufacturers. Medicare payroll tax increased to 1.95 percent on income over $200,000 a year for individuals; $250,000 for couples. New 5 percent tax on elective cosmetic surgery. Cuts to Medicare and Medicaid. Excise tax on insurance companies, keyed to premiums paid on health care plans costing more than $8,500 annually for individuals and $23,000 for families. Fees on employers whose workers receive government subsidies to help them pay premiums. Fines on people who fail to purchase coverage.

The House bill (Affordable Health Care for America Act):

WHO'S COVERED: About 96 percent of legal residents under age 65 — compared with 83 percent now. Government subsidies to help buy coverage start in 2013. About one-third of the remaining 18 million people under age 65 left uninsured would be illegal immigrants.

COST: The Congressional Budget Office says the bill's cost of expanding insurance coverage over 10 years is $1.055 trillion. The net cost is $894 billion, factoring in penalties on individuals and employers who don't comply with new requirements. That's under President Barack Obama's $900 billion goal. However, those figures leave out a variety of new costs in the bill, including increased prescription drug coverage for seniors under Medicare, so the measure may be around $1.2 trillion.

HOW IT'S PAID FOR: $460 billion over the next decade from new income taxes on single people making more than $500,000 a year and couples making more than $1 million. The original House bill taxed individuals making $280,000 a year and couples making more than $350,000, but the threshold was increased in response to lawmakers' concerns that the taxes would hit too many people and small businesses.