Q&A: US healthcare reform

Healthcare reform in the US is entering a critical phase

US President Barack Obama made reform of the American healthcare system his top priority when he entered the White House.

He had pledged to get a reform bill passed in 2009 but that will not happen now until early 2010.

The two versions passed by the House of Representatives and Senate on 7 November and 24 December respectively must now be combined into a single bill that President Obama can sign into law.

How is the US healthcare system currently structured?

Unlike other developed countries, the US does not have a universal system of healthcare coverage.

It is up to individuals to obtain health insurance. Most Americans obtain coverage through their employers, but others sign up for private insurance schemes.

Under the terms of most coverage plans, members pay regular premiums, but they are sometimes also required to pay part of the cost of their treatment (known in the US as a deductible) before the insurer covers the expense. The amount they pay varies according to their plan.

Does the US government provide health coverage for anyone?

Yes. Americans aged 65 or over can sign up for the government-run Medicare scheme, and low-income parents, children, pregnant women and people with certain disabilities are eligible for the government-administered Medicaid programme.

The US government also runs the State Children's Health Insurance Program (S-Chip), which provides coverage to children whose parents are on modest incomes, but not poor enough to qualify for Medicaid.

Military veterans are also provided healthcare by a government-run scheme.

So what are the problems with the US system?

Healthcare costs for individuals are rising dramatically.

Premiums for employer-provided schemes have risen four times faster than wages, and are now double their cost nine years ago.

The percentage of employees with an annual deductible greater than $1,000 increased from 1% to 18% between 2000 and 2008.

As a nation, the US spent some $2.2tn (£1.36tn) on healthcare in 2007. That amounts to 16.2% of GDP, nearly twice the average of other OECD countries.

What are the effects of rising health costs?

The rising individual costs mean that more and more people in America are unable to afford health insurance. Tens of millions of Americans do not have insurance, and millions more are deemed "under-insured".

When someone without insurance (or with inadequate cover) falls ill, they are obliged to pay their medical costs out of their own pocket.

Mr Obama says he wants to pass healthcare reform by the end of 2009

Half of all personal bankruptcies in the US are at least partially the result of medical expenses.

Rising costs also mean the government is spending more and more on Medicare and Medicaid.

US government spending on the two schemes is projected to rise from 4% of GDP in 2007 to 7% in 2025 and 12% in 2050, making rising healthcare costs one of the biggest contributing factors to the spiralling US budget deficit.

How many people in America do not have health insurance?

The US census bureau estimates that 46.3 million people in America, out of a population of 300 million, were uninsured in 2008.

Supporters of healthcare reform often use this figure as evidence that the system is failing too many Americans and needs to change.

Some opponents, however, say the figure is misleading as it includes illegal immigrants, Americans who earn over $50,000 a year and Americans who are eligible for Medicaid or S-Chip who could get coverage if they wanted to. It also includes people who may have been temporarily in between jobs, and therefore only briefly without coverage.

The census bureau confirms that the 46.3 million figure includes 9.2 million non-citizens, and 18 million people who earn over $50,000 a year.

But backers of reform insist that - aside from illegal immigrants, who would not be covered under any of the plans for reform proposed by Congress or the White House - many of the 46.3 million uninsured people would indeed benefit from an overhaul, and that it is therefore a meaningful figure to cite.

What has President Obama proposed?

Mr Obama wants to provide more security and stability to Americans who have health insurance, provide insurance to those who do not have it, and slow the growth of healthcare costs.

He supports tougher regulations for the insurance industry, ensuring that people with pre-existing conditions cannot be refused cover, and preventing insurers from dropping people's coverage when they get ill.

For those whose employers do not provide coverage, Mr Obama wants to create Health Insurance Exchanges - one-stop shops for people to compare different options. The president supports a proposal to set up a government-run scheme that would be offered to people who are eligible for the exchanges, but he has indicated that he would still support a bill that did not include this so-called "public option".

Under Mr Obama's plan, every American would be required to get insurance, or face a fine (this is called an "individual mandate"). Less well-off Americans would be offered subsidies to help them pay for their coverage.

The president would pay for reform by cutting waste from the existing Medicare programme, and levying fees on insurance companies who offer "gold-plated" insurance plans.

What about Congress?

The broad outlines of the House and Senate bills are pretty similar and compatible with President Obama's vision for healthcare reform.

All the bills:

• favour tougher regulations for insurers
• establish an individual mandate - that is you must get health insurance
• set up insurance exchanges for those who do not have coverage provided by employers
• offer subsidies for the less well off - although their exact size varies from committee to committee
• pay for most of the reforms by cutting waste in the Medicare programme

The major points of disagreement are on the public option and how to pay for the remainder of reform.

The Senate health committee was the first to pass a healthcare reform bill

The House of Representatives bill, costed at $1tn over 10 years, backs a public option and proposes to pay for reform by, among other measures, levying a surtax of up to 5.4% on families earning $500,000 or more a year.

The Senate bill, put at $871bn over 10 years, does not include a public option.

The Congressional Budget Office (CBO) calculates that the House bill would expand coverage to 36 million more Americans; the Senate bill to 31 million.

Like the House bill, the Senate measure would require everyone to buy insurance and would create exchanges where people could choose between options. It would also subsidise low-income Americans.

Republicans criticised a number of tax increases - included to help pay for the expanded insurance coverage - in the bill.

So how can the differences between the bills be resolved?

A conference committee will be established, made up of members from both chambers, to reconcile the two versions of the bill.

This will include deciding whether the final version will have a public option.

Then, both chambers will vote on the final version of the bill. If both vote in favour, the bill will go to the president for his approval.