Staff members of the three House committees (Ways and Means, Education and Labor, and Energy and Commerce) involved in crafting the healthcare overhaul bill have put together an 11-page document (pdf) highlighting the similarities and differences between the House and Senate bills. The Senate’s Patient Protection and Affordable Care Act (H.R. 3590) and the House of Representative’s Affordable Health Care for America Act (H.R. 3962) contain some crucial differences that are currently being ironed out in informal talks as opposed to formal conference committee. Resolving the differences this way avoids any anticipated procedural delays in the Senate.

According to the comparison, differences in provisions affecting employers and the insurance industry include the following:

Employer financial requirements

For employers that do not meet the small employer exemption thresholds, the House bill stipulates that employers that do not offer qualified coverage must pay an 8 % payroll tax on wages for all employees, including full-time, part-time, and temporary employees. The total employer payment in lieu of providing coverage would amount to $135 billion. The Senate bill requires employers that do not offer any coverage to pay $750 per employee if even one employee receives a tax credit in the health insurance exchange (“Exchange”). This requirement applies only to full-time workers (those who work at least 30 hours per week, calculated on a monthly basis). Employers that do offer some coverage pay a penalty for employees who use the Exchange and get tax credits where the employee share of the employer premium is more than 9.8% of income and/or the employer does not offer minimal coverage. The penalty is $3,000 per employee using the Exchange and receiving a credit. The maximum penalty, however, would be $750 times the number of full-time employees in the workforce. Employers would also pay a penalty if they have a waiting period for coverage exceeding 60 days. Total employer payment in lieu of providing coverage amounts to $28 billion.

Employer contribution and benefit standards

The House bill requires employers to meet a financial contribution level (72.5% of premium for individuals; 65% for families), benefit standards, and consumer protection standards. Contributions can be made on a pro rata basis for employees who work less than full-time. The Senate bill does not contain minimum contribution and benefit standards, but does contain the penalty discussed above if the employer-provided insurance is deemed unaffordable or inadequate. In addition, employees whose share of premiums falls between 8% and 9.8% of their income can convert their employer contribution into a “free choice voucher” to use to shop for insurance in the Exchange.

Employer grandfather provisions

The House bill includes a five-year grace period for employers offering coverage to meet some of the requirements. It is important to note that the grandfathered status would end if changes to the plan are made. According to the summary, the Senate bill permanently grandfathers existing employer plans offering any level of coverage. Barring certain exceptions, the plans would not be required to adopt insurance reforms or quality standards.

Minimum benefit standard

The House bill sets a minimum standard of 70% of actuarial value, meaning that on average, the plan covers approximately 70% of expected costs and the individual would be responsible for 30% of these costs. The Senate bill sets a minimum standard of 60% of actuarial value, which, the summary explains, would result in a lower premium than that set forth in the House bill because of reduced benefits.

Public Option

The House Bill includes in the Exchange a national public health insurance option administered by the Department of Health and Human Services. Instead of a public option, the Senate Bill directs the Office of Personnel Management to contract for two-multi-state qualified health insurance plans, one of which must be non-profit, available in each state Exchange.

Taxes

The House bill imposes a 5.4% surcharge on incomes in excess of $500,000 for individuals, and $1 million for joint filers, effective in 2011. The Senate bill does not contain such a provision, but does include a 40% excise tax on high-cost group health (“Cadillac”) plans that exceed $8,500 for individuals and $23,000 for family plans, and a 0.9% Medicare HI payroll tax on wages in excess of $200,000 for individuals, and $250,000 for joint filers. Both of these Senate bill taxes would take effect in 2013.

Health industry fees

The Senate bill imposes an annual $2.3 billion fee, effective 2010, on manufactures and importers of branded drugs. This fee would be allocated based on proportional market share. The bill also imposes annual fees on health insurance providers, allocated based on proportional share of total health insurance premiums. Self-insured plans would be exempt from these fees. The House bill does not contain similar provisions. Both bills, however, would impose fees on insured and self-insured plans for comparative effective research, effective 2013, and on medical devices.

Other Health-related revenue provisions

Both bills would eliminate the deduction for expenses allocable to the Medicare Part D subsidy ($2.2 billion effective 2013 for the House bill; $5.4 billion effective 2011 for the Senate bill). In terms of executive compensation, the Senate bill – but not the House bill – would impose a $500,000 deduction limitation on remuneration to employees, officers, and directors of health insurance providers, effective 2013.

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