Overhaul passes with 1 GOP vote; next up: Senate

WASHINGTON — The Democrat-controlled House narrowly passed landmark health-care legislation Saturday night to expand coverage to tens of millions who lack it and place tough new restrictions on the insurance industry. Republican opposition was nearly unanimous.

The 220-215 vote cleared the way for the Senate to begin debate on the issue that has come to overshadow all others in Congress.

A triumphant Speaker Nancy Pelosi likened the legislation to the passage of Social Security in 1935 and Medicare 30 years later.

“It provides coverage for 96 percent of Americans. It offers everyone, regardless of health or income, the peace of mind that comes from knowing they will have access to affordable health care when they need it,” said Rep. John Dingell, the 83-year-old Michigan lawmaker who has introduced national health insurance in every Congress since succeeding his father in 1955.

In the run-up to a final vote, conservatives from the two political parties joined forces to impose tough new restrictions on abortion coverage in insurance policies to be sold to many individuals and small groups. They prevailed on a roll call of 240-194.

Ironically, that only solidified support for the legislation, clearing the way for conservative Democrats to vote for it.

Indiana’s House delegation voted along party lines.

The legislation would require most Americans to carry insurance and would provide federal subsidies to those who otherwise could not afford it. Large companies would have to offer coverage to their employees. Both consumers and companies would be slapped with penalties if they defied the government’s mandates.

Insurance industry practices such as denying coverage on the basis of pre-existing medical conditions would be banned, and insurers would no longer be able to charge higher premiums on the basis of gender or medical history. The industry would lose its exemption from federal antitrust restrictions on price gouging, bid rigging and market allocation.

A cheer went up from the Democratic side of the House when the bill gained 218 votes, a majority. Moments later, Democrats counted down the final seconds of the voting period in unison and let loose an even louder roar when Pelosi grabbed the gavel and declared, "The bill is passed.’

From the Senate, Majority Leader Harry Reid of Nevada issued a statement saying, “We realize the strong will for reform that exists, and we are energized that we stand closer than ever to reforming our broken health insurance system.”

The bill drew the votes of 219 Democrats and Rep. Joseph Cao, a first-term Republican who holds an overwhelmingly Democratic seat in New Orleans. Opposed were 176 Republicans and 39 Democrats.

Nearly unanimous in their opposition, minority Republicans cataloged their objections across hours of debate on the 1,990-page, $1.1 trillion legislation.

“We are going to have a complete government takeover of our health-care system faster than you can say, ‘This is making me sick,’ " said Rep. Candice Miller, R-Mich., adding that Democrats were intent on passing “a jobs-killing, tax-hiking, deficit-exploding” bill.

But with little doubt about the outcome, the rhetoric lacked the fire of last summer’s town hall meetings, when some critics accused Democrats of plotting “death panels” to hasten the demise of senior citizens.

At its core, the measure would create a federally regulated marketplace where consumers could shop for coverage. In the bill’s most controversial provision, the government would sell insurance, although the Congressional Budget Office forecasts that premiums for it would be more expensive than for policies sold by private firms.

The bill is projected to expand coverage to 36 million uninsured, resulting in 96 percent of the nation’s eligible population having insurance.

To pay for the expansion of coverage, the bill cuts Medicare’s projected spending by more than $400 billion over a decade. It also imposes a tax surcharge of 5.4 percent on income over $500,000 in the case of individuals and $1 million for families.

The bill was estimated to reduce federal deficits by about $104 billion over a decade, although it lacked two of the key cost-cutting provisions under consideration in the Senate, and its longer-term impact on government red ink was far from clear.

Democrats lined up a range of outside groups behind their legislation, none more important than the AARP, whose support promises political cover against the cuts to Medicare in next year’s congressional elections.

The nation’s drug companies generally support health-care overhaul. And while the powerful insurance industry opposed the legislation, it did so quietly, and the result was that Republicans could not count on the type of advertising campaign that might have peeled away skittish Democrats in swing districts.

Overall, the bill envisioned the most sweeping set of changes to the health-care system in more than a generation, and Democrats said it marked the culmination of a campaign that Harry Truman began when he sat in the White House 60 years ago.

Debate on the House floor had already begun when President Barack Obama strode into a closed-door meeting of the Democratic rank and file across the street from the Capitol to make a final personal appeal to them to pass his top domestic priority.

Later, in an appearance at the White House, he said he had told lawmakers “to rise to this moment. Answer the call of history, and vote yes for health insurance reform for America.”

A Republican alternative was rejected on a nearly party line vote of 258-176.

It relied heavily on loosening regulations on private insurers to reduce costs for those who currently have insurance, in some cases by as much as 10 percent. But congressional budget analysts said the plan would make no dent in the ranks of the uninsured, an assessment that highlighted the difference in priorities between the two political parties.

It was a theme of Obama’s remarks to Democrats at midmorning.

The president said Democrats have a 70-year history of creating and defending programs like Social Security and Medicare, Rep. Robert Andrews, D-N.J., said afterward, adding Obama had said the day’s vote “is going to define the difference between the Republican and Democratic parties for decades.”

Attention on health-care reform will now shift back to the Senate. If the Senate acts, negotiations to iron out differences between the two chambers could be wrenching. Among the toughest issues: whether the public option should include an opt-out clause for states, as Reid has proposed; whether to require employers to provide coverage to their workers or take the less punitive approach preferred by Senate moderates; and whether to tax the rich or tax high-cost health-care policies, as the Senate proposed — a provision economists call the most important in either bill for reining in costs.

WHEN THINGS WOULD CHANGE

Changes that would begin in 2010:

People who have been uninsured for several months or were denied coverage because of a pre-existing condition could join a temporary insurance program.

In denying coverage for a pre-existing condition, insurers could consider only conditions that existed for the previous month instead of the previous six months. They also would face tighter restrictions on reasons for canceling coverage after a customer submits a claim.

People paying through COBRA to keep insurance they had through a previous employer could continue doing that until a new health insurance exchange begins for people not offered coverage through an employer.

Insurers would have to justify annual premium increases and could not impose lifetime caps on benefits.

Young adults could stay on their parents’ plans until their 27th birthday.

Seniors affected by the “doughnut hole” gap in Medicare prescription drug coverage would pay half-price for brand-name drugs. The gap would begin to narrow in 2010 and would be eliminated by 2019.

Medicare patients would no longer be charged co-pays or deductibles for preventive services.

Changes that would begin in 2011:

Individuals earning more than $500,000 and couples earning more than $1 million would be taxed an additional 5.4 percent on income above those levels.

Changes that would begin in 2013:

Insurers could not deny coverage for pre-existing conditions or charge higher premiums based on health status, gender or occupation. They could charge a limited amount more for older customers.

A health insurance exchange would begin operating for the smallest businesses and for people not offered coverage through an employer. People making up to 400 percent of the federal poverty level would receive subsidies to help them afford coverage through the exchange. People who decide not to get coverage could be penalized 2.5 percent of their income.

Plans sold on the exchange would have to provide a minimum level of benefits. They could not charge co-pays for preventive services or set annual limits on benefits, and the amount of out-of-pocket expenses consumers would have to pay would be limited to $5,000 annually for an individual and $10,000 annually for a family.

Medicaid would expand to cover people earning up to 150 percent of the poverty level.

The amount of money people could contribute tax-free to flexible spending accounts for medical expenses would be limited to $2,500 a year.

Changes that would begin in 2018:

Employers would pay a penalty if their payrolls exceed $500,000 and they don’t offer coverage to their workers.

Employers that don’t use the health insurance exchange would have to meet minimum benefit requirements in the plans they offer to employees.

— Maureen Groppe

HOUSE VS. SENATE

The House Democratic bill

WHO’S COVERED: About 96 percent of legal residents younger than 65 — compared with 83 percent now. About one-third of the remaining 18 million people younger than 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 rules.

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. There are also more than $400 billion in cuts to Medicare and Medicaid; a $20 billion fee on medical device makers; $13 billion from limiting contributions to flexible spending accounts; sizable penalties paid by individuals and employers who don’t obtain coverage; and other corporate taxes and fees.

REQUIREMENTS FOR INDIVIDUALS: Individuals must have insurance, enforced through a tax penalty of 2.5 percent of income. People can apply for hardship waivers if coverage is unaffordable.

REQUIREMENTS FOR EMPLOYERS: Employers must provide insurance to employees or pay a penalty of 8 percent of payroll. Companies with payrolls of less than $500,000 annually are exempt, and the penalty is phased in for companies with payrolls from $500,000 to $750,000. Businesses with 10 or fewer workers get tax credits to help them provide coverage.

INSURANCE INDUSTRY RESTRICTIONS: No denial of coverage based on pre-existing conditions. No higher premiums allowed for pre-existing conditions or gender. Limits on higher premiums based on age.

GOVERNMENT-RUN PLAN: A new public plan available through an insurance exchange would be set up and run by the secretary of health and human services.

CHANGES TO MEDICAID: The federal-state insurance program for the poor would expand to cover everyone younger than 65 with incomes up to 150 percent of the federal poverty level, which is $33,075 per year for a family of four.

DRUGS: Grants 12 years of market protection to high-tech drugs used to combat cancer, Parkinson’s and other deadly diseases. Phases out the gap in Medicare prescription drug coverage by 2019. Requires the HHS secretary to negotiate drug prices on behalf of Medicare beneficiaries.

The Senate Democratic bill

WHO’S COVERED: The Senate Finance version covered an estimated 94 percent of Americans. Illegal immigrants would not receive government benefits.

COST: Senate leaders aim to keep it less than $900 billion over 10 years.

HOW IT’S PAID FOR: Fees on insurance companies, drug makers and medical device makers. Tax on insurance companies equal to 40 percent of total premiums paid on plans costing more than $8,000 annually for individuals and $21,000 for families. Cuts to Medicare and Medicaid. A fee on employers whose workers get government subsidies to help them pay premiums. Fines on people who don’t buy coverage.

REQUIREMENTS FOR INDIVIDUALS: Almost everyone must get coverage through an employer, on their own or through a government plan. Exemptions for economic hardship. Those who are obligated to buy coverage and refuse would face a fine of perhaps $100 in the first year of the program, likely to increase over time.

REQUIREMENTS FOR EMPLOYERS: Not required to offer coverage, but companies with more than 50 full-time workers would pay a fee as high as $750 multiplied by the total size of the work force if the government ends up subsidizing employees’ coverage.

INSURANCE INDUSTRY RESTRICTIONS: No denial of coverage based on pre-existing conditions. No higher premiums allowed for pre-existing conditions or gender. Limits on higher premiums based on age and family size.

GOVERNMENT-RUN PLAN: Majority Leader Reid proposed a new federal insurance plan last week with payment rates to providers negotiated by the HHS secretary. States could opt out of the plan. The bill also would create nonprofit, member-owned co-ops to compete with private insurers.

DRUGS: Grants 12 years of market protection to high-tech drugs for cancer, Parkinson’s and other deadly diseases. Drug companies contribute $80 billion over 10 years, with most of that used to limit the prescription coverage gap in Medicare.

CHANGES TO MEDICAID: Income eligibility levels likely to be standardized to 133 percent of the poverty level, which is $29,327 a year for a family of four, for all parents, children and pregnant women. States could negotiate with insurers to arrange coverage for people with incomes slightly higher than the cutoff for Medicaid.

— Associated Press