Page last updated at 10:36 GMT, Thursday, 25 March 2010

Q&A: US healthcare reform

On 23 March 2010, US President Barack Obama signed his landmark healthcare bill into law.

The bill - passed on 21 March after months of heated debate and amid deeply divided public opinion - was the biggest change in US health policy for four decades.

But in a further twist, a package of amendments to the legislation will have to be voted on again by the House of Representatives after Republicans identified what were termed "procedural violations".

What has been passed?

The main healthcare legislation bill was passed by 219 votes to 212 in the House of Representatives, with no Republican backing.

Medicare: government-funded healthcare for over-65s
Medicaid: government-funded healthcare for those on low incomes
Employer-funded health insurance: paid by salary deduction
Military veterans: receive healthcare via government-run scheme
State Children's Health Insurance Programme: coverage for children whose parents do not qualify for Medicaid
Uninsured: treated in emergency rooms only

The House also approved a separate package of amendments - a reconciliation bill - that had been agreed among House and Senate Democrats by 220 to 211.

President Obama signed the healthcare bill into law without delay after the House vote, as he did not need to wait for the Senate vote on the reconciliation bill.

That package went to the Senate where Democrats were hoping it would be passed by a simple majority under a technique known as budget reconciliation.

This means the amendments have to relate to budgetary rather than policy issues, but crucially it means they can be approved in the Senate by a simple majority, which the Democrats have, rather than the 60 seats needed to prevent Republican blocking tactics.

So why is the reconciliation bill going back to the House?

The Republicans identified problems with at least two provisions in the amendments package, arguing they did not fall under budget reconciliation rules.

The amendments relate to changes to the student loan programme and technical budget procedures.

The Senate Parliamentarian, who acts in a non-partisan capacity and advises on the interpretation of rules and procedures, upheld the Republicans' challenge.

This means 16 lines of text will be removed from the 153-page bill but that is enough to require another House vote on the amendments.

How important is this latest development?

Democrats say the need for another vote is just a glitch and that the provisions in question are relatively minor.

A spokeswoman for Tom Harkin, the Democratic chairman of the Senate Health Committee, said they were confident the House would quickly pass the bill "with these minor changes".

But it is an unwelcome snag for the Democrats and President Obama in their marathon efforts to complete an overhaul of healthcare.

How much is healthcare going to change and who is affected?

Virtually every American, but in a variety of ways depending on age and income. The reforms over the next 10 years will bring about changes to the health insurance industry and also expand coverage.

US healthcare reform bill

estimated cost of healthcare bill image
President Obama says the reforms will make healthcare more affordable and health insurers more accountable. The reforms aim to reduce the federal deficit by $143bn by 2019, by tackling waste, fraud and abuse.
estimated effects on insurance coverage image
The reform expands coverage to 32 million Americans who currently cannot afford premiums or who cannot get cover. From 2014, most people will be required to obtain health insurance or face a fine.
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So what are the key changes for individuals?

The reform expands coverage to 32 million Americans who are currently uninsured because they cannot afford rising premiums or who are deemed too sick by insurance companies to qualify for coverage:

  • an estimated 24 million who lack health insurance will be eligible for tax credits to buy insurance on new insurance exchanges
  • an estimated 16 million will become eligible for Medicaid - the government-funded healthcare for those on low incomes

From 2014, most people will be required to obtain health insurance or face a fine of at least $695 a year or 2.5% of their income.

What other key reforms are there?

Insurance companies will be prevented from dropping people when they get sick.


Cost: $940bn over 10 years; would reduce deficit by $143bn
Coverage: Expanded to 32m currently uninsured Americans
Medicare: Prescription drug coverage gap closed; affected over-65s receive rebate and discount on brand name drugs
Medicaid: Expanded to include families under 65 with gross income of up to 133% of federal poverty level and childless adults
Insurance reforms: Insurers can no longer deny coverage to those with pre-existing conditions
Insurance exchanges: Uninsured and self-employed able to purchase insurance through state-based exchanges
Subsidies: Low-income individuals and families wanting to purchase own health insurance eligible for subsidies
Individual Mandate: Those not covered by Medicaid or Medicare must be insured or face fine
High-cost insurance: Employers offering workers pricier plans subject to tax on excess premium

The companies will be stopped from denying coverage to children with pre-existing conditions, a prohibition that will apply to everyone from 2014.

Insurers will be prevented from putting lifetime caps on coverage. There will also be restrictions on their use of annual limits to ensure people can access care.

Many Americans obtain their health insurance from their employers via salary deductions and this is set to continue.

However, the currently uninsured and self-employed will be able to buy coverage from state-based exchanges or marketplaces where they can shop for a deal that meets federal standards.

The reforms also tackle what is known as the "doughnut hole" - a gap that affects millions of over-65s who get health coverage via Medicare.

Currently people have to pay if their prescriptions cost more than $2,700 and only qualify for coverage again if the cost passes $6,154. The legislation will move to give people rebates and discounts on brand name drugs.

Young adults will be able to stay on their parents' health plans until they are 26. Currently many insurance companies drop dependants when they turn 19 or finish college.

When will these changes take effect?

Some of the changes will take effect immediately but others will not come into force until 2014.

Who stands to benefit?

The biggest beneficiaries are clearly the currently uninsured. But given the scope of the legislation, there are other people and sectors who could see benefits.

Although the insurance industry is facing tighter regulation, there will be potentially millions of new customers. And the final bill does not create what was initially proposed - a government-run scheme that would compete with private insurers.

More people with coverage means more able to pay for their hospital treatment, visits to their doctors, and prescription drugs - a potential boon for hospitals and drug companies.

Who stands to lose out?

Wealthier Americans will be required to pay more taxes. From 2013, families with an income above $250,000 will have to pay an additional 3.8% on their investment income and contribute more to Medicare from their income tax.

Employers who have 50 or more workers could face fines if they do not provide a health insurance plan.

Why was there such opposition?

The Republicans argue that healthcare reform means further government intrusion into the private choices of Americans.

They also say that the changes will drive up costs and increase the budget deficit.

According to preliminary estimates from the non-partisan Congressional Budget Office , the healthcare legislation will cut the federal deficit by $138bn (£92bn) over 10 years, while costing about $940bn (£626bn) over the same period.

The attorneys general in Virginia, South Carolina and Florida, have indicated they will challenge the reform in the courts, arguing that it violates the Constitution by requiring individuals to buy insurance.

There has also been vocal public opposition, most visibly via the Tea Party movement .

Opinion polls have suggested that people support individual elements of the reforms but that there is significant opposition to the overall legislation.

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