What health reform means for you

The bills are in flux, but it's time to dig in. Here's what the big idea in Washington could mean if you get insurance at work, buy it on your own, or have none at all.

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By Jeanne Sahadi, CNNMoney.com senior writer

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NEW YORK (CNNMoney.com) -- Lawmakers are still far from consensus on how to fix the health care system. So it's too soon to know exactly what reform would mean for individual Americans.

But a picture has started to emerge from two key bills put out by Democrats in the House and Senate. A third bill is expected soon from the Senate Finance Committee.

The first two bills propose:a national insurance exchange on which insurers would compete for consumers' business;

  • a public health plan that would compete with private insurers on that exchange;
  • and subsidies for financially strapped Americans eligible to buy health insurance on the exchange.

Both bills would also set minimum standards for health insurance policies and require insurers to guarantee coverage for those with pre-existing conditions.

Considered in broad terms, here's how those bills are likely to affect three groups of Americans: those who are currently insured through their employer; those who buy insurance on their own; and the 49 million Americans who are expected to go uninsured next year.

You get coverage at work

Unlikely to see much change: The more than 160 million Americans with employer-sponsored insurance today wouldn't see much change, said Congressional Budget Office Director Douglas Elmendorf after doing a preliminary analysis of the two bills.

That would accomplish one of lawmakers' goals for health reform -- to preserve the employer-based health insurance system.

But it doesn't prevent companies from changing workers' plans if they decide to change the benefits menu or switch policy providers.

At the same time, workers with insurance through their employers are not likely to see lower premiums, Elmendorf told lawmakers last week. In fact, at least initially, their premiums may continue to increase apace as they have for years.

And if workers don't like the health options provided by their employers, they may not have the option of buying insurance on the exchange. That's because the bills include "firewalls" that would prevent them from doing so.

Under the House bill, for instance, only workers who today pay more than 11% of their income for employment-based coverage would be allowed to purchase a policy on the exchange and would qualify for a subsidy.

In all, the CBO estimates that the House bill might allow about 3 million workers with employer-based coverage to qualify to buy subsidized insurance on the exchange. The added advantage for them is that they wouldn't have to change insurance policies bought on the exchange if they changed jobs.

May have to pay a new tax: The most controversial debate over health reform is how to cover the cost. Roughly half is likely to be paid for with new tax revenue.

The House bill calls for a surtax on high-income earners -- starting at $280,000 for singles and $350,000 for married couples. The surtax would run as high as 5.4% on income over $1 million.

But on Monday, House Speaker Nancy Pelosi let it be known that she may push to increase those thresholds so the surtax would only affect individuals making at least $500,000 and couples making $1 million or more.

"It narrows the number of people who would be affected. I think it probably goes a long way in protecting the small businesses we were concerned about and it puts more pressure on our House colleagues who are writing the bill to identify more in savings." Rep. Gerry Connolly, D-Va., told CNN.

The Senate Finance Committee had been heavily focused on taxing a portion of the health benefits that workers currently receive as tax-free income from their employers. But that idea has run into political headwinds.

Whether a benefits tax of some kind ends up in the final package is still anyone's guess. If it does, however, not everyone would have to pay it.

That's because a benefits tax can be set up so that it only targets a certain group of people -- for example, those with very expensive health insurance plans, or high earners with expensive plans.

It's also possible a benefits tax would not be included at all. Another idea reportedly under consideration is a tax on insurers and employers that offer expensive or "Cadillac" plans. Of course, if that happens, it is possible the cost of the tax would be passed along to workers in the form of higher premiums.

You get it on your own

Likely to see lower costs: The people most likely to see a decrease in what they pay for health insurance are those who currently buy policies on their own, Elmendorf said.

That group could see their costs go down for three reasons: the creation of an insurance exchange; the additional competition from a public plan; and guarantees that insurers could not refuse coverage to anyone with a pre-existing condition, he noted.

If their income qualifies them for a federal subsidy, consumers who currently buy insurance on their own could see their costs go down considerably from where they are today. Under the House bill a family of three making up to $73,240 this year could qualify for some subsidy.

May get help from an employer: The CBO estimates that under the House bill roughly 3 million people could be added to the rolls of those with employer-sponsored insurance. That's because the bill would require companies either provide workers with coverage or pay into the health insurance exchange to subsidize the cost of their policies.

You have no insurance

May get help from the government: Those who are uninsured may get a subsidy from Uncle Sam if their income qualifies. Or they may qualify for Medicaid since both the House and Senate bills would expand eligibility for the program -- under the proposals, eligibility would be extended to those with income up to 150% of poverty level in the Senate health committee bill and up to 133% in the House bill.

Will be required to have insurance: Both bills would mandate that most individuals be insured or pay a penalty. The CBO estimates the House bill would reduce the number of uninsured by more than 68% within 10 years.

- CNN's Dana Bash and Deirdre Walsh contributed to this report To top of page

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