Changes to Medicare would decrease the cost of prescription drugs for certain seniors, improve the delivery of care by incentivizing preventive care and more efficient treatment, and eliminate overpayments to Medicare Advantage, a program of private health plans that receive payments from Medicare. The legislation also includes an Independent Medicare Advisory Board charged with issuing recommendations for reducing Medicare spending. The recommendations would take effect in the absence of legislative action.

The bill prohibits rescissions, an insurance industry practice that denies health cover to policyholders after they have become sick or have had an accident. It also includes caps on out-of-pocket expenses; restrictions on annual and lifetime benefit limits and denials of coverage or increased premiums because of gender or a preexisting condition (such as a health problem); and limits on how much premiums can be increased because of a policyholder’s age.

The legislation requires every individual to purchase insurance or face a penalty of $750 by 2016, but allows exemptions for hardship. Individuals who like their current insurance policy are able to keep it. Employers with more than 200 employees must enroll new hires in a health insurance plan. Employers with more than 50 employees who either do not offer coverage or whose coverage is unaffordable must pay a fee if one of its employees receives subsidized insurance through an exchange.

The Health Benefit Exchanges will offer a range of private insurance plans, all of which must provide a minimum level of benefits.

Although eligibility for Medicaid varies, currently low-income childless adults generally do not qualify and only parents with incomes significantly below the poverty line are eligible. The federal government would fund the entire expansion of Medicaid through 2016 at which point states would begin contributing to the expanded coverage.