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The plan would focus on universal coverage and addressing the underlying problems in health system.

Senate Finance Committee Chairman Max Baucus, last week released the long-awaited proposal to overhaul the U.S. healthcare system which is President Barack Obama's top domestic priority. Baucus has been trying for months to write a health care bill that could win Republican support. The plan would require all Americans to get health insurance, either through an employer, a government program or on their own. The bill would stand for a meaningful health reform legislation that achieves universal coverage while also addressing the underlying problems in health system.

With a price tag of about $900 billion, The Baucus plan emphasize on the insurance market reforms and payment system changes, as well as requirements for all citizens and legal residents to buy insurance. The plan demands the non-profit cooperatives to create competition in the insurance market and reduce costs and it does not include a government-run "public" insurance option. The updated details of the Baucus proposal are as follows

Major insurance market reform measures

• Creating state-based exchanges inorder to facilitate the use of internet for individuals and small businesses to purchase insurance.
• Four categories of minimum benefits would be offered through the exchange.
• Introduction of policy, offering catastrophic coverage for young adults- "young invincible" plan.
• 2013 onwards, the insurance companies wont be able to exclude people from coverage based on pre-existing conditions. The lifetime limits on coverage and and limited-benefit plans will be removed.
• Insurers would be prohibited from calling off health coverage.
• The plan would  ensure the sale of national plans with constsnt and equal benefits across state lines.

Health Cooperatives

• The Baucus proposal does not contain a new government healthcare plan to compete with private plans,
  which is supported by Obama and liberal Democrats but which faces opposition of Republicans and health insurers.
• Provisons for creation of non-profit "consumer operated and oriented" plans or cooperatives.
• Federal loans will be granted to provide assistance in case of start-up costs and federal grants
  would be offered to meet state solvency requirements.
• The cooperatives would compete with private insurers in the non-group and small-group insurance markets.

Mandates and Affordability Measures

• The plan creates provision for health coverage for all by which all U.S. citizens and legal residents would be required to obtain health coverage, starting from 2013.
• The proposal offers sliding scale of tax subsidies for low and middle income people, up to 300 percent of poverty-line income, buy health insurance.
• People whose income is 300 to 400 percent above the poverty line would get credits if premiums exceed 12 percent of their income.
• Limits out-of-pocket expenses for individuals and families between 200 and 300 percent of poverty. In 2010 the limits would equal $3,987 for an individual and $7,973 for a family.
• Availability of cost-sharing subsidy for whom falls between 100 and 200 percent of poverty-line income.
• The plan proposes the penalty for people who fails to purchase insurance. It wolud be close to $750 per individual with a maximum of $1,500 for families with incomes between 100 percent and 300 percent of poverty.
• There is an exemption proposed for those who cannot afford coverage.  And people below 100 percent of poverty would not be subject to a penalty in case of failure to purchase insurance.
• The Medicaid system for poor would be expanded so everyone up to 133 percent of poverty-line income could qualify.
• The employers are not required to offer health insurance scheme, but if the firm employs 50 or more full-time workers it should pay a fee for employees who get policies subsidized by federal tax credits.
  Workers enrolled in Medicaid wont be imposed of any fee.

Revenue Raising Fees And Taxes

• Starting in 2010, health insurance providers collectively would have to pay an annual fee of $6.7 billion, under which the fee would be allocated on the basis of their respective market shares. And the Pharmaceutical companies collectively would pay an annual fee of $2.3 billion allocated by their market share.
• Medical device makers collectively would pay an annual fee of $4 billion, allocated by market share. Some items sold at retail for less than $100 would be exempted from the fee calculation.
• An excise tax of 40 percent would be levied on insurance companies for health plans above $8,000 for singles and $21,000 for families. The tax would apply to self-insured and group-market plans but not to plans sold in the individual market. Threshold would be indexed for inflation plus 1 percent.
• Insurance policies for retired people aged 55 and higher who are not eligible for Medicare as well as workers in high risk professions, such as coal mining, would have a higher threshold of $8,750 for singles and $23,000.

Source: Reuters