In addition to the differences in the bills that the House and Senate passed, the two measures differ sharply on the all-important question of how to pay for health care reform -- estimated to cost some $1 trillion over 10 years.  

The elephant in the room: How to pay for healthcare reform?

Printable comparison of key provisions in House and Senate health care reform bills 

In addition to the differences in the bills that the House and Senate passed, the two measures differ sharply on the all-important question of how to pay for health care reform -- estimated to cost some $1 trillion over 10 years. 

House-passed bill: The principal revenue source for financing new subsidies for the uninsured and for expanding the federal/state Medicaid program would be a new income surtax imposed on higher income individuals. 

Specifically, the House-passed bill would impose a surtax of 5.4 percent on individual incomes in excess of $500,000 and joint filers of $1 million. This new tax, which targets the rich and would be effective in 2011, is expected to generate some $460 billion over a 10-year period, approximately half the cost of the new legislation. 

Senate-passed bill: The Senate legislation contains several major tax-based new revenue sources to pay for health coverage subsidies for the uninsured. 

Most importantly, the Senate measure would create a new excise tax on high-value group health plans, the so-called Cadillac health plans. Pegged at 40 percent, this tax would be imposed on the "excess value" of employer-sponsored health coverage over and above a threshold level below which health benefits would remain tax free. The threshold established in the Senate-passed bill is $8,500 for individual coverage and $23,000 for family health plans. 

Put another way, health plans, either fully insured or self-insured, whose value exceeds the thresholds of either $8,500 or $23,000, would be subject to the 40 percent excise tax on the excess value. 

The special new excise tax on health plans is expected to raise approximately $150 billion over 10 years and to begin in 2013. 

In addition to the excise tax, the Senate-passed legislation also includes an increase in the Medicare payroll tax by 0.9 percent, from 1.45 percent to 2.35 percent, on wages in excess of $200,000 for single filers and in excess of $250,000 for those who file joint returns. 

The higher Medicare payroll tax would apply only to employees and would kick in only after an individual's wages exceeded the statutory thresholds. It would take effect in 2013 and raise $87 billion over 10 years. 

The Senate-approved legislation would also impose new "fees" on the health industry. This includes a $22 billion fee effective in 2010 on manufacturers and importers of branded drugs, a $19 billion fee on medical device makers, and a $60 billion fee on health insurance providers, which excludes self-insured plans. 

Among other revenue provisions, both bills would raise $13 billion over 10 years by capping the amount that employees can contribute to flexible spending accounts on a pretax basis. The new FSA cap would be $2,500 per year and take effect in 2011 under the Senate bill and in 2013 under the House bill. 

Perhaps the most challenging aspect of the effort to reconcile the two very different bills will be to reach a compromise on the "pay-for" -- the contrasting revenue raising provisions. 

President Obama has said that health care reform should not "add one dime" to the federal budget deficit. Therefore, this legislation must be fully paid for and, no doubt, will involve substantial new taxes as well as substantial new compliance responsibilities for employers. Ceridian is paying close attention to the developments coming from Capitol Hill on these key issues.