Health Reform: What's In, What's Out and What's ChangedUpdated:
Patricia Murphy and Jill Lawrence

Politics Daily (March 17) -- Despite all the feverous negotiations going on in Washington, the basic elements of health care reform are largely settled.

President Barack Obama's proposal, released Feb. 22, largely keeps in intact much of the health reform framework passed by Senate Democrats in December, including a mandate requiring Americans to purchase health insurance, a process for the federal government to subsidize people who cannot afford coverage, and taxes and fees to raise revenue to pay for those subsidies.

Until Congress hashes out its legislative language, the president's proposal is the closest description of what is expected to be put to a vote.

What's in:

Insurance mandate: The bill would require every American to purchase health insurance, either through an employer or through new health insurance exchanges created by the bill.

In order to encourage businesses to provide insurance for their employees, companies with more than 50 employees will pay fines to the government if they do not.

Health care exchanges: The new health care exchanges will include for-profit and nonprofit insurance companies and will be run by states or multistate cooperatives. At least two plans will be run by the Office of Personnel Management, which now handles plans for federal employees. Individual customers can shop for insurance in the exchanges, in some cases across state lines.

Insurance rules: Insurance companies will be required to include a minimum level of coverage for all customers and will be prohibited from dropping or denying coverage based on a customer's medical history. Companies also cannot implement caps on lifetime coverage.

Federal subsidies: If a person or family cannot afford coverage, the federal government will subsidize the cost of coverage for families making up to $88,000 a year.

Medicaid: The bill will also expand Medicaid to include as many as 15 million more people living just above the poverty line.

Medicare: The measure also eliminates Medicare co-payments for preventive and screening services and phases out the so-called "doughnut hole" that leaves some prescription drugs uncovered, starting with an immediate $250 rebate in 2010.

Dependent care: Also starting immediately, parents will be able to keep dependent children on their health plans until they are 26 years of age, and insurance companies will have to cover children with pre-existing conditions.

What's likely to change:

"Cornhusker Kickback": To address the backlash over perceived backroom deals in the Senate version, President Obama said he would eliminate the "Cornhusker Kickback," the provision negotiated by Sen. Ben Nelson, D-Neb., to require the federal government to pay for his state's portion of the costs for Medicaid expansion. Instead, the federal government will pay for 100 percent of the Medicaid increase for all states through 2018, and a declining share after that.

Taxes and credits: To pay for this expansion, the president has proposed that a 40 percent excise tax be added to expensive insurance policies for all policyholders, not just union members (as had been previously negotiated), until 2018.

Obama would also increase the Medicare payroll tax on earnings over $200,000 for individuals and $250,000 for married couples, and impose a 2.9 percent tax on unearned income for higher-income taxpayers.

For small businesses, $40 billion in tax credits would help employers pay for insurance for their workers.

Rate regulations: This is a proposal to give the federal government authority over insurance rates. Right now, rates are regulated only at the state level, and in some states they are not regulated at all.

GOP contributions: A number of Republican ideas were incorporated into the health reform package during committee work, including new steps to combat fraud and abuse in the Medicare and Medicaid programs. On March 2, the president said he was open to four more proposals from GOP lawmakers. They are: Using undercover investigators to detect Medicare fraud, adding $50 million for medical malpractice demonstration programs, encouraging wider use of health savings accounts, and possibly increasing Medicaid reimbursement rates to doctors. For procedural reasons, it is not clear yet whether all four will be in the final package.

Abortion: Obama opted to keep the Senate's more liberal language on abortion funding in the bill. It would require at least one option on every heath care insurance exchange to provide coverage for elective abortion services and allow women who choose that coverage to pay for it, as long as they use their own money. Federal subsidies could not directly pay for abortion coverage.

Immigrants: At the same time, the president chose the more restrictive Senate language barring illegal immigrants from purchasing health insurance through the exchanges, even with their own money. The House would have allowed such access for undocumented workers.

What's gone:

Public option: The president decided against including a public option, or government-run insurance coverage, which the House passed in November.

A word about costs:

One hurdle has come from budget restrictions on the proposal. Because Democrats are using a procedure called "reconciliation" to pass the bill, congressional rules require that the legislation reduce the deficit over the next five years and be revenue neutral after that.

The arbiter for predicting the costs of new government programs is the Congressional Budget Office, and so each side has been eagerly awaiting the CBO "scoring" -- balancing the costs of a proposed measure against its revenues. On Thursday morning, House Democratic Leader Steny Hoyer released a preview of CBO's cost estimate for Democrats' final health care reform proposal.

According to Hoyer, the CBO has estimated that despite a 10-year cost of some $940 billion over 10 years, the bill would actually cut the deficit by $130 billion in the first 10 years and more than $1 trillion in the next 10 years. It would do that by raising taxes on high-dollar insurance plans; expanding the Medicare payroll tax to unearned income for wealthy earners; imposing fees on medical supplies and pharmaceuticals, and collecting penalties from large business that do not insure their employees along with fees levied against individuals who can afford insurance but do not buy it.