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The Senate on Nov. 21 approved by a 60-39 margin a procedural motion to take-up a sweeping $849 billion health care reform measure, but some moderate Democrats said their vote to proceed does not ensure their support for final passage. The full Senate returns from Thanksgiving recess on Nov. 30 and lawmakers are expected to engage in a lengthy debate stretching into late December.

Senate Democratic leadership warned that if the bill is not finished by the holidays, the Senate could take an abbreviated break and quickly return to work "We have to finish it in the Senate or it's going to be maybe a long lunch break over Christmas," Majority Whip Dick Durbin, D-Ill., said Nov. 22 on NBC's "Meet The Press."

Central issues to the looming debate include whether or not to provide a public option, statutory language disallowing any federal funding for abortions, and a 40 percent tax on high end insurance plans that could hit middle income earners. Democratic leaders are expected to negotiate with moderate democrats on a compromise solution regarding a government sponsored health insurance plan.

Senate Majority Leader Harry Reid (D-Nev.) on Nov. 18 unveiled the health care reform plan—the Patient Protection and Affordable Health Care Act—that the Congressional Budget Office reported would cost $849 billion over 10 years (see ¶53,210). The 10-year cost of the revised legislation comes in well below the $900 billion threshold set by President Obama and would cut the federal budget deficit by $127 billion over 10 years. The plan would reduce the number of uninsured by 31 million by making coverage available to 94 percent of eligible Americans, according to a Senate Democratic leadership aide.

The legislation would institute a variety of health insurance market reforms, some that would take effect almost immediately, and some in 2014. In 2010, a new federal program would do the following—(1) offer insurance coverage for uninsured individuals with pre-existing conditions; (2) create a re-insurance program to enable employer-sponsored health plans to offer coverage for early retirees; (3) reduce the size of the coverage gap (or “donut hole”) under the Medicare Part D prescription drug program; (4) provide tax credits to small business to make it easier for them to offer health insurance to their employees; (5) extend dependent coverage to allow children to stay on family plans until age 26; and (6) provide for prevention and wellness benefits that are offered without deductibles or other cost-sharing.

Starting in 2014, the legislation would: (1) end insurance underwriting and pre-existing condition exclusions; (2) restrict variances in premiums; (3) establish exchanges in each state to help individuals and small employers obtain health insurance coverage; (4) provide tax credits to help individuals purchase insurance; and (5) create a limited mandate for individuals to purchase insurance, and employers to offer it, or to pay a penalty.

A value-based purchasing program for hospitals participating in Medicare would launch in FY 2013. This program would link Medicare payments more closely to health care quality. A new Center for Medicare and Medicaid Innovation would be established within CMS to research and test innovative delivery and payment arrangements. Medicare Part C payments would be adjusted to match fee-for-service Medicare payments more closely . A new adjustment to the market basket update for most Part A provider payments will reward productivity. The House bill includes similar provisions to these Medicare provisions.

A Medicare Advisory Board established by the Senate bill would develop proposals to reduce Medicare cost and improve quality. Unless Congress specifically passes alternative legislation that would create the same savings, these proposals would go into effect.

Under the legislation, states would be allowed to expand Medicaid eligibility to everyone with an income of less than 133 percent of the federal poverty level (FPL); under the House bill approved on Nov. 7, Medicaid eligibility would extend to everyone with an income less than 150 percent of the FPL. States would be required to maintain income eligibility levels for the Children's Health Insurance Program (CHIP) until the end of the 2019 fiscal year. Enrollment procedures for CHIP would be coordinated along with enrollment into insurance plans offered by the new exchanges. (Under the House bill, the CHIP program would end in 2014.)

Federal disproportionate share hospital payments to states would be reduced as a state's uninsured population decreases; the House bill includes a similar provision.

To reduce physician self-referrals that increase Medicare spending, physician-owned hospitals that do not have a Medicare provider agreement prior to February 2010 would not be allowed to participate in Medicare. Skilled nursing facilities under Medicare and nursing facilities under Medicaid would be required to provide specific ownership information. New procedures to screen providers and suppliers participating in Medicare, Medicaid and CHIP would be put in place. Additional Medicare and Medicaid program integrity provisions would be enacted.

The legislation includes several provisions designed to increase the number of healthcare worker, especially in the area of primary care. Unfilled residency positions will be redirected for the training of primary care physicians (the House bill has a similar provision). Federal student loan programs would be modified to make the primary care student loan program more attractive. New and expanded funding would be provided for federally qualified health centers.

The legislation would be financed several ways, including (1) an excise tax on high cost employer-sponsored health insurance policies; (2) higher taxes on distributions from health savings accounts that are not used for qualified medical expenses; (3) new fees on pharmaceutical and medical device manufacturers, and health insurance providers; (4) a tax on elective cosmetic surgery; (5) various other changes in deductions related to health care spending.

Sen. Ben Nelson (D-Neb.) expressed concern about the excise tax on high-end insurance plans, although Reid adjusted the 40 percent excise tax on such plans by raising the threshold at which insurers would pay the fee. The tax now applies to family plans costing $23,000 or more and individual plans priced over $8,500, a $2,000 and $500 increase, respectively. The lost revenue would be made up with a 0.5 percent increase in the Medicare payroll tax for couples with incomes over $250,000 and individuals with earnings over $200,000. The provision would raise $54 billion over 10 years. Reid also added a new 5 percent tax on cosmetic surgery that would raise an addition $5 billion.

The revised legislation also slices in half the tax on medical devices from $40 billion to $20 billion. Additional changes to health care tax incentives include capping flexible spending account (FSA) contributions, conforming definitions of deductible medical expenses, and changing penalties for the improper use of health spending account (HSA) funds.

House passes Medicare physician payment fix