Chairmen of the House Committees on Education and Labor, Ways and Means, and Energy and Commerce finally unveiled the House Democrats’ massive 1,018 healthcare reform bill on Tuesday. The much-anticipated America’s Affordable Health Choices Act (H.R. 3200) (pdf) was introduced following a number of delays caused, in part, by concern over many of the bill’s more controversial provisions, such as the public health insurance option and employer mandates. These contentious provisions remain in the final bill, albeit with some greater leeway for small employers.

In general, this bill would require most large employers to provide health insurance to their employees, or contribute funds (in the form of an 8 percent payroll tax) on their behalf to help subsidize coverage in a newly-created Health Insurance Exchange (“Exchange”). A summary of the bill describes the Exchange as:

a transparent and functional marketplace for individuals and small employers to comparison shop among private and public insurers. It works with state insurance departments to set and enforce insurance reforms and consumer protections, facilitates enrollment, and administers affordability credits to help low- and middle-income individuals and families purchase insurance. Over time, the Exchange will be opened to additional employers as another choice for covering their employees. States may opt to operate the Exchange in lieu of the national Exchange provided they follow the federal rules.

As part of the employer “pay-or-play” option as described in a summary of the shared responsibility portion of the bill:

• Employers would contribute 72.5 percent of the cost of premiums for all full-time employees’ health coverage and 65 percent for a family policy.
• Employers have the option of providing part-time employees with health coverage by contributing a share of the expense, or contributing to the Exchange in order for part-time employees to seek coverage there.
• In the fifth year after the Exchange begins, companies that offer health insurance would have to meet minimum coverage standards like those required of plans in the Exchange.
• If an employer chooses not to offer health coverage to its employees, a penalty will be assessed based on the size of company’s payroll, which will fund the Exchange.

Small businesses with payrolls under $250,000 are exempt from the pay-or-play mandate. For businesses with payrolls over $250,000, the payroll penalty would start at 2% and rise to the full 8% for businesses with annual payrolls over $400,000. A small business tax credit would be available for small firms that chose to provide health insurance.

Portions of this bill regulating insurance coverage and market reforms have also raised concerns in the insurance industry. This bill would prohibit preexisting condition exclusions in health insurance plans, in addition to lifetime and annual limitations on benefits. The bill likewise bans the practice of charging higher health insurance rates based on factors such as gender or health status. Premiums would be allowed to vary based on age (to a limited extent), geography and family size only. Insurers would also be prohibited from refusing to sell or renew policies based on an individual’s health status.

Markup of this legislation is expected to begin later this week, with the goal of holding a vote before the August recess. Given the controversy surrounding healthcare reform plus the estimated $1 trillion price tag, it is questionable whether this deadline will be met. 

In related news, the Senate Health, Education, Labor and Pensions Committee voted 13-10 today along party lines to approve the Senate’s healthcare overhaul bill. This bill will need to be cleared from four other Senate committees before it can be put up for a final vote.