The health overhaul package passed by the House Sunday and sent to the Senate for final action is the most far-reaching health legislation since the creation of the Medicare and Medicaid programs.
While the underlying Senate bill will become law as soon as President Barack Obama signs it, additional changes will occur if the Senate passes the reconciliation-bill part of the package. The following is a look at the impact of the entire package, which would extend insurance coverage to 32 million additional Americans by 2019, but also have an effect on almost every citizen.
Here's where things stand and how you might be affected:
Q: I don't have health insurance. Would I have to get it, and what happens if I don't?
A: Under the legislation, most Americans would have to have insurance by 2014 or pay a penalty. The penalty would start at $95, or up to 1 percent of income, whichever is greater, and rise to $695, or 2.5 percent of income, by 2016. This is an individual limit; families have a limit of $2,085. Some people would be exempted from the insurance requirement, called an individual mandate, because of financial hardship or religious beliefs or if they are American Indians, for example.
Q: I want health insurance, but I can't afford it. What do I do?
A: Depending on your income, you might be eligible for Medicaid, the state-federal program for the poor and disabled, which would be expanded sharply beginning in 2014. Low-income adults, including those without children, would be eligible, as long as their incomes didn't exceed 133 percent of the federal poverty level, or $14,404 for individuals and $29,326 for a family of four, according to current poverty guidelines.
Q: What if I make too much for Medicaid but still can't afford coverage?
A: You might be eligible for government subsidies to help you pay for private insurance that would be sold in the new state-based insurance marketplaces, called exchanges, slated to begin operation in 2014.
Premium subsidies would be available for individuals and families with incomes between 133 percent and 400 percent of the poverty level, or $14,404 to $43,320 for individuals and $29,326 to $88,200 for a family of four.
The subsidies would be on a sliding scale. For example, a family of four earning 150 percent of the poverty level, or $33,075 a year, would have to pay 4 percent of its income, or $1,323, on premiums. A family with income of 400 percent of the poverty level would have to pay 9.5 percent, or $8,379.
In addition, if your income is below 400 percent of the poverty level, your out-of-pocket health expenses would be limited.
Q: How would the legislation affect the kind of insurance I could buy? Would it make it easier for me to get coverage, even if I have health problems?
A: If you have a medical condition, the bill would make it easier for you to get coverage; insurers would be barred from rejecting applicants based on health status once the exchanges are operating in 2014.
In the meantime, the bill would create a temporary high-risk insurance pool for people with medical problems who have been rejected by insurers and have been uninsured at least six months. That would occur this year.
And starting later this year, insurers could no longer exclude coverage for specific medical problems for children with pre-existing conditions, nor could they any longer set lifetime coverage limits for adults and kids.
In 2014, annual limits on coverage would be banned.
New policies sold on the exchanges would be required to cover a range of benefits, including hospitalizations, doctor visits, prescription drugs, maternity care and certain preventive tests.
Q: How would the legislation affect young adults?
A: If you're an unmarried adult younger than 26, you could stay on your parent's insurance coverage as long as you are not offered health coverage at work.
In addition, people in their 20s would be given the option of buying a "catastrophic" plan that would have lower premiums. The coverage would largely only kick in after the individual had $6,000 in out of pocket expenses.Q: I own a small business. Would I have to buy insurance for my workers? What help could I get?
A: It depends on the size of your firm. Companies with fewer than 50 workers wouldn't face any penalties if they didn't offer insurance.
Companies could get tax credits to help buy insurance if they have 25 or fewer employees and a workforce with an average wage of up to $50,000. Tax credits of up to 35 percent of the cost of premiums would be available this year and would reach 50 percent in 2014. The full credits are for the smallest firms with low-wage workers; the subsidies shrink as companies' workforces and average wages rise.
Firms with more than 50 employees that do not offer coverage would have to pay a fee of up to $2,000 per full- time employee if any of their workers got government-subsidized insurance coverage in the exchanges. The first 30 workers would be excluded from the assessment.
Q: I'm over 65. How would the legislation affect seniors?
A: The Medicare prescription-drug benefit would be improved substantially. This year, seniors who enter the Part D coverage gap, known as the "doughnut hole," would get $250 to help pay for their medications.
Beyond that, drug company-discounts on brand-name drugs and federal subsidies and discounts for all drugs would gradually reduce the gap, eliminating it by 2020. That means that seniors, who now pay 100 percent of their drug costs once they hit the doughnut hole, would pay 25 percent.
And, as under current law, once seniors spend a certain amount on medications, they would get "catastrophic" coverage and pay only 5 percent of the cost of their medications.
Meanwhile, government payments to Medicare Advantage, the private-plan part of Medicare, would be cut sharply starting in 2011. If you're one of the 10 million enrollees, you could lose extra benefits that many of the plans offer, such as free eyeglasses, hearing aids and gym memberships. To cushion the blow to beneficiaries, the cuts to health plans in high-cost areas of the country such as New York City and South Florida – where seniors have enjoyed the richest benefits -- would be phased in over as many as seven years.
Beginning this year, the bill would make all Medicare preventive services, such as screenings for colon, prostate and breast cancer, free to beneficiaries.
Q: How much is all this going to cost? Will it increase my taxes?
A: The bill is estimated to cost $940 billion over a decade. But because of higher taxes and fees and billions of dollars in Medicare payment cuts to providers, the bill would narrow the federal budget deficit by $138 billion over 10 years, according to the Congressional Budget Office.
If you have a high income, you face higher taxes. Starting in 2013, individuals would pay a higher Medicare payroll tax of 2.35 percent on earnings of more than $200,000 a year and couples earning more than $250,000, up from the current 1.45 percent. In addition, you'd face an additional 3.8 percent tax on unearned income such as dividends and interest over the threshold.
Starting in 2018, the bill would also impose a 40 percent excise tax on the portion of most employer-sponsored health coverage (excluding dental and vision) that exceeds $10,200 a year for individuals and $27,500 for families.
The bill also would raise the threshold for deducting unreimbursed medical expenses from 7.5 percent of adjusted gross income to 10 percent.
The bill also would limit the amount of money you can put in a flexible spending account to pay medical expenses to $2,500 starting in 2013. Those using an indoor tanning salon will pay a 10 percent tax starting this year.
Q: What will happen to my premiums?
A: That's hard to predict and the subject of much debate. People who are sick might face lower premiums than otherwise because insurers wouldn't be permitted to charge sick people more; healthier people might pay more. Older people could still be charged more than younger people, but the gap couldn't be as large.
The bigger question is what happens to rising medical costs, which drive up premiums. Even proponents acknowledge that efforts in the legislation to control health costs, such as a new board to oversee Medicare spending, wouldn't have much of an effect for several years.
In November, a CBO report on how the legislation – which at that point had a tougher Cadillac tax – would affect premiums said big employers would see premiums stay flat or drop 3 percent compared to today's rates. It also noted that employees with small-group coverage might see their premiums stay the same. And Americans who received subsidies would see their premiums decline by up to 11 percent, according to the CBO.