Federal Relations

March 24, 2010

President Signs Historic Health Insurance Overhaul Into Law

**UPDATE: The Federal Report, provided on the right-side user bar of this website, provides greater coverage of the health insurance and student aid legislation.

After more than a year of debate, on Sunday March 21st, the  House of Representatives voted 219-212 to approve the Senate’s health insurance reform package, which passed that body in December.  Additionally, the House passed by a 220-211 vote a reconciliation bill that contained a set of desired fixes to the Senate bill and an overhaul of the federal student loans programs.  Yesterday, in a ceremony at the White House, President Obama signed the underlying health insurance bill into law. The reconciliation package is now being considered in the Senate, where passage is virtually assured, given that only a simple majority is needed to send the legislation to the President. 

Health Insurance Provisions of Note from Underlying Reform and Reconciliation Bills
Extension of Coverage

  • Overall, the underlying bill and reconciliation fixes will extend health insurance coverage to 32 million people, 95% of legal residents and 92% of all U.S. residents. The Congressional Budget Office estimates that the legislation will cost $940 billion over 10 years.
  • Creates state-based exchanges where individuals without employer-provided insurance could purchase health care coverage. Federal subsidies would be available to help cover the cost for individuals who earn between 133 percent and 400 percent of the federal poverty level ($24,352 to $73,240 for a family of three in 2010).
  • Individuals who earn enough to pay income taxes would pay a penalty of either $325 or 2 percent of their income, whichever is higher, in 2015 if they failed to purchase health insurance.

Graduate Medical Education

  • Increases the number of Graduate Medical Education (GME) training positions by redistributing currently unused slots, with priority given to primary care and general surgery and to states with the lowest resident physician-to-population ratios.
  • Increases the flexibility in laws and regulations that govern GME funding to promote training in outpatient settings and ensure the availability of residency programs in rural and underserved areas.
  • Supports training of health professionals through scholarships and loans; supports primary care training and capacity building; provides state grants to providers in medically underserved areas; train and recruit providers to serve in rural areas; establishes a public health workforce loan repayment program; provides medical residents with training in preventive medicine and public health; promotes training of a diverse workforce; and promote cultural competence training of health care professionals. (Effective dates vary) Support the development of interdisciplinary mental and behavioral health training.

Medicare/Spending Offsets

  • Reduces the amount of the Medicare cut from $24.4 billion to $21.4 billion and the Medicaid cut from $18.5 billion to $14.1 billion. However, both reductions would begin in 2014 instead of the original start date of 2015.
  • Increases the Medicare payroll tax for individuals making more than $200,000 and couples making more than $250,000 and impose an additional 3.8% surtax on investment income.
  • Provides a $250 rebate to seniors who reach a gap in Medicare prescription drug coverage known as the “doughnut hole,” starting in 2010. The doughnut hole would be phased out by 2020.
  • Imposes fines on employers of 50 or more full-time workers if the employer does not provide health insurance coverage. Fines would have to be paid if one or more workers obtains federal subsidies for insurance, at a rate of $2,000 for every worker beyond the first 30 employees.
  • Advances Medicare disproportionate share hospital (DSH) cuts to begin in fiscal year 2014 but lowers the ten-year reduction by $3 billion.

Student Aid Provisions of Note from Reconciliation Bill
Pell Grant

  • The maximum Pell award would increase annually (starting in academic year 2013-14) from the current level of $5,550.  The annual increase would be at the rate of the Consumer Price Index (CPI). The maximum would reach its peak in 2017-2018 and level off for the remainder of the life of the legislation.
  • The legislation would allocate $13.5 billion for the shortfall in the program.  The funds would be available through the end of FY2012.

Student Loan Program Changes

  • The Federal Family Education Loan (FFEL) Program would be terminated on July 1, 2010.  All new loans after that date would be originated through the Direct Loan (DL) program.
  • Borrowers would be allowed to consolidate into DL.
  • “Not-for-profit servicers,” including state entities, would be allowed to service loans, if they had contracts before July, 2009.
  • $50 million for the Department of Education to provide technical assistance to institutions making the switch to DL.
  • Income-based repayment (IBR):  Effective July, 1, 2014, repayments would be capped at ten percent of adjusted gross income (AGI) (currently capped at 15 percent) and the balance of the loan would be cancelled after 20 years (currently cancelled after 25 years).
  • State-owned banks:  State-owned banks would qualify as a government entity for the purposes of originating student loans.

College Access Challenge Grants

  • Created by the most recent higher education reauthorization bill, the program would receive $750 million over five years (FY2010 – FY2014) under this legislation.  Each state would be guaranteed at least one percent of the funding.

Community Colleges

  • Through a Trade Adjustment Act program administered by the Labor Department, community colleges would receive $500 million annually for four years, with 0.5 percent guaranteed for each state.