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President Obama's New Health Reform Plan: A Breakdown of Key Components

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On Feb. 22, Obama released his own proposal for health reform. The plan, though largely based on the Senate legislation, brings together some key provisions of the House and Senate plans, and represents what the president considers to be the ideal solution to health reform. Here, ASJ breaks down its key provisions.

  • The largest ever middle-class tax cut for health care, reducing premium costs for families and small-business owners; according to the White House, this helps more than 31 million Americans without health care to afford coverage.
  • A new competitive health insurance market that will give Americans the same insurance choices that members of Congress have
  • More accountability on the part of the insurance industry
  • An end to limits on providing benefits to those with pre-existing conditions
  • A deficit reduction of $100 billion over the next 10 years – and about $1 trillion over the second decade – by cutting government overspending and cutting down on waste, fraud, and abuse (a significant amount of money for the plan – almost $20 billion over the course of 10 years – would come from such administrative changes as fewer forms and improved health information technology)
  • Partial funding from the so-called “Cadillac tax,” an excise tax on high-cost insurance plans
  • Elimination of the Nebraska FMAP provision (Federal Medical Assistance Percentage) and significant additional federal financing to all states for the expansion of Medicaid
  • Closing of the Medicare prescription drug “doughnut hole” coverage gap
  • Increase in the threshold for the excise tax on the most expensive health plans, from $23,000 for a family plan to $27,500,
  • Creation of a new Health Insurance Rate Authority to provide federal assistance and oversight to states in conducting reviews of unreasonable rate increases and other questionable practices of insurance plans

All of this sounds pretty great, right? However, for those who currently have insurance and earn a higher-than-average salary, the president’s proposal does include additional taxes, which will mean that high-income consumers will pay more. One of the most controversial is a tax on capital income to support entitlement programs, which means that capital gains, interest, dividends, annuities, royalties, and rents for families earning more than $250,000 a year ($200,000 for single filers) could be taxed to pay for such programs as Medicare and Hospital Insurance.

And according to Nancy-Ann DeParle, director of the White House Office of Health Reform, the middle class won’t find much assistance right off the bat, either.

“As everyone gets covered, we can reform the insurance markets and bring down the costs for everybody,” she said during a public live chat on Feb. 24. This might seem promising, but it’s also a thinly veiled way of saying it will take some time for this reform plan to help the middle class.

Of course, the way our government is set up, the president can’t simply suggest a plan and have it go into effect. There has to be some interest from Congress members willing to take on the changes Obama has proposed. If he can’t drum up that support, then we’ll return to the Senate plan as our base for health reform.

Heather Trese is the associate editor of the Agent’s Sales Journal. She can be reached at [email protected] or 800-933-9449 ext. 225.