FACTBOX - Summary of Obama's healthcare proposal

  • World
  • Wednesday, 03 Mar 2010

(Reuters) - President Barack Obama is preparing a final push for a healthcare overhaul and is expected to announce a plan on Wednesday to move the ambitious legislation forward without support from opposition Republicans.

Last week he announced what he wanted in legislation to bridge differences with bills passed by the House of Representatives and Senate. On Tuesday Obama listed some Republican ideas that he said he was considering.

Here is a summary of his proposals and the Republican ideas he is exploring.


The White House plan calls for state-based insurance exchanges similar to the proposal in the Senate-passed bill.

The White House proposal does not call for the creation of a new government-run health insurance program -- the so-called public option -- supported by liberals and included in the House bill.

Instead, it sticks with the Senate version, which provides for the federal Office of Personnel Management to negotiate with private insurers to provide multi-state health plans on the exchanges.


The White House rejected the House-proposed 5.4 percent surtax on high-income households -- the so-called millionaires' tax -- and instead adopted the Senate approach to raise the Medicare tax on high-income earners to 2.9 percent from 2.35 percent. But the White House plan goes one step further and would impose a new 2.9 percent Medicare tax on some investment income for high-income people. Medicare is the government health insurance program for the elderly and disabled.

The White House plan also modifies the proposed Senate tax on high-cost insurance plans. The so-called "Cadillac" tax would kick in on plans costing $10,200 for individuals and $27,500 for family plans. The starting date for the tax is 2018 rather than 2013 as originally called for in the Senate bill. The change is similar to a deal worked out with labor unions, but would apply to all plans.

The proposal also provides higher tax thresholds for firms that have higher costs because they employ mostly women or older workers. It also provides higher thresholds for high-risk professions such as firefighters.

Obama's plan increases proposed new assessments on brand-name pharmaceuticals to raise $23 billion over 10 years, compared to $10 billion in the Senate bill. Those assessments would be delayed by one year until 2011.

The White House proposes closing a tax loophole on a cellulosic biofuels credit to prevent it from being used for a paper processing byproduct. It would also clarify "economic substance" tax rules on investment transactions and raise penalties on transactions that have no economic purpose except to avoid paying taxes.


The White House plan would improve affordability by taking favorable provisions from the House and Senate bills to help both low- and moderate-income families. A family of four earning as much as $88,000 a year would receive federal assistance in paying for healthcare costs.

The bill would also gradually close the so-called "doughnut" hole in Medicare prescription drug coverage. Medicare now stops paying for drugs after both the plan and beneficiary have spent $2,830. Coverage starts again only after out-of-pocket spending hits $4,550. By 2020, the coverage gap would be closed.


The White House plan would allow young adults up to the age of 26 to stay on a parent's health insurance plan. Within months of enactment, insurers would be barred from dropping people from their health plans. When exchanges begin operation in 2014, insurers would be barred from excluding people for pre-existing conditions and setting annual and lifetime coverage limits. The Department of Health and Human Services would get new authority to help states review annual premium rate increases.


The White House keeps the Senate and House requirement that individuals purchase health insurance. It sided with the Senate on not imposing an employer mandate and assessing fees on those uninsured companies with employees receiving subsidized health policies on the exchange. The White House modified the fees that those companies would pay.

Small firms with fewer than 50 employees would be exempt from those requirements. But a tax credit is provided to encourage small companies to offer health coverage to workers.


*An idea by Senator Tom Coburn that medical professionals be engaged to conduct undercover investigations of healthcare providers to reduce waste and fraud in Medicare and Medicaid.

*Increase proposed grants to states for demonstration projects to resolve medical malpractice disputes and curb the need for lawsuits. Some $23 million has been approved for these programs and Obama said he is considering authorizing as much as $50 million for the projects.

*Increasing doctor reimbursements for Medicaid patients. Obama said Senator Charles Grassley raised a concern about Medicaid reimbursement rates at last week's White House healthcare "summit."

*A proposal by Senator John Barrasso to expand health savings accounts used in conjunction with high-deductible health plans. Obama said he is open to including high-deductible health plans on proposed new insurance exchanges to encourage more people to take advantage of the health savings accounts.

(Reporting by Donna Smith in Washington; Editing by Howard Goller and Chris Wilson)

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