The Senate Finance Committee approved a measure, America's Healthy Future Act of 2009, on October 13, 2009. S. 1796 , based on that approved measure, was ordered reported on October 19. Included in the committee report accompanying S. 1796 was preliminary analysis conducted by the Congressional Budget Office (CBO) on October 7 regarding the potential impact of the Chairman's Mark. CBO projected that the Mark legislation would reduce federal deficits by $81 billion over a 10-year period (2010-2019), and would insure 94% of the non-elderly, legally present U.S. population by 2019. This report summarizes the key provisions affecting private health insurance in Titles I and VI of S. 1796 , American's Healthy Future Act of 2009, as ordered reported by the Senate Committee on Finance on October 19, 2009. Title I of the bill focuses on restructuring the private health insurance market, setting minimum standards for health benefits, and providing financial assistance to certain individuals and, in some cases, small employers. Overall, the bill includes the following provisions: Individuals would be required to maintain health insurance, and certain employers with more than 50 employees would be required to either provide insurance or pay a tax, with some exceptions. Several market reforms would be made, such as modified community rating and guaranteed issue and insurance renewal. Both the individual mandate and any employer requirements would be linked to essential health benefits coverage. Qualifying coverage would include: qualified health benefits plans (QHBPs) offered in or out of an exchange; new group or individual coverage that meets or exceeds minimum health benefits; grandfathered employment based plans; grandfathered nongroup plans; and other coverage, such as Medicare and Medicaid. Either a state would establish separate exchanges to offer individual versus small group coverage, or the Secretary of Health and Human Services (hereafter referred to as the "Secretary" or "HHS Secretary" unless noted otherwise) would contract with a nongovernmental entity to establish and operate exchanges in states that did not establish them. Exchanges would not be insurers but provide eligible individuals and small businesses with access to private plans in a comparable way. Certain individuals with incomes below 400% of the federal poverty level could qualify for credits toward their premium costs and subsidies towards their cost-sharing. This financial assistance would be available only through exchanges. States would be provided the flexibility to establish basic plans for low-income individuals not eligible for Medicaid. Existing plans offered by employers as well as plans offered in the individual market (the nongroup market) would be grandfathered. However, existing small group plans would have to meet the applicable private market reforms by July 1, 2013. New plans could also be sold in both the individual and group market outside of an exchange, but only those new plans that meet the minimum requirements specified in the bill would satisfy the requirements for individuals and employers. Title VI includes a number of provisions to raise revenues to pay for expanded health insurance coverage. The revenue provisions include excise taxes and annual fees on health insurers, as well as limitations on executive compensation of insurance companies. In addition, a number of revenue provisions limit contributions to tax-advantaged accounts (i.e., flexible spending accounts and health savings accounts) and other itemized deductions used for health care expenses. This report begins by providing background information on key aspects of the private health insurance market as it exists currently. This information is useful in setting the stage for understanding how and where S. 1796 would reform health insurance. This report summarizes key provisions affecting private health insurance in Titles I and VI of America's Healthy Future Act of 2009, as ordered reported by the Senate Committee on Finance on October 19, 2009. Although most of the provisions would be effective beginning in July 1, 2013, the table in the Appendix shows the timeline for implementing provisions effective prior to that date. Although the description that follows segments the private health insurance provisions into various categories, these provisions are interrelated and interdependent. For example, the bill includes a number of provisions to alter how current private health insurance markets function, primarily for individuals who purchase coverage directly from an insurer or through a small employer. S. 1796 would require that insurers not exclude potential enrollees or charge them premiums based on pre-existing health conditions. In a system where individuals voluntarily choose whether to obtain health insurance, however, individuals may choose to enroll only when they become sick. This can lead to a situation known as "adverse selection," which may result in higher premiums and greater uninsurance. When permitted, insurers often guard against adverse selection by adopting policies such as underwriting health insurance policies based on individual health status and excluding coverage for pre-existing conditions. If reform eliminates many of the tools insurers use to guard against adverse selection, America's Health Insurance Plans (AHIP), the association that represents health insurers, has stated that all individuals must be required to have coverage ("individual mandate"), so that not just the sick enroll. Furthermore, some individuals currently forgo health insurance because they cannot afford the premiums. If individuals are required to obtain health insurance, one could argue that adequate premium subsidies must be provided by the government and/or employers to make practical the individual mandate to obtain health insurance, which is in turn arguably necessary to make the market reforms possible. In addition, premium subsidies without cost-sharing subsidies may provide individuals with health insurance that they cannot afford to use. So, while the descriptions below discuss various provisions separately, the removal of one from the bill could be deleterious to the implementation of the others. The private health insurance provisions are presented under the following topics, with the primary CRS contact listed for each: Individual mandate and employer requirements: the mandate for individuals to maintain health insurance and any requirements for employers. [[author name scrubbed], [phone number scrubbed]] Private health insurance market reforms. [[author name scrubbed], [phone number scrubbed]] Exchange [Chris Peterson, [phone number scrubbed]], through which the following two items can only be offered: Health Care Cooperatives. [[author name scrubbed], [phone number scrubbed]] Premium subsidies. [Chris Peterson, [phone number scrubbed]] Title VI: Select Revenue Provisions Relating to Private Health Insurance [[author name scrubbed], [phone number scrubbed]] Americans obtain health insurance in different settings and through a variety of methods. People may get health coverage in the private sector or through a publicly funded program, such as Medicare or Medicaid. In 2008, 60% of the U.S. population had employment-based health insurance. Employers choosing to offer health coverage may either purchase insurance or choose to self-fund health benefits for their employees. Other individuals obtained coverage on their own in the nongroup market. However, there is no federal law that either requires individuals to have health insurance or requires employers to offer health insurance. Approximately 46 million individuals (15% of the U.S. population) were estimated to be uninsured in 2008. Individuals and employers choosing to purchase health insurance in the private market fit into one of the three segments of the market, depending on their situation—the large group (large employer) market, the small group market, and the nongroup market. More than 96% of large employers offer coverage. Large employers are generally able to obtain lower premiums for a given health insurance package than small employers and individuals seeking nongroup coverage. This is partly because larger employers have a larger "risk pool" of enrollees that makes the expected costs of care more predictable. Employers generally offer large subsidies toward health insurance, thus making it more attractive for both the healthier and the sicker workers to enter the pool. So, not only is the risk pool large in size, but it is also contains diverse risks. States have experimented with ways to create a single site where individuals and small employers could compare different insurance plans, obtain coverage, and sometimes pool risk. Although most of these past experiments failed (e.g., California's PacAdvantage ), other states have learned from these experiences and have fashioned potentially more sustainable models (e.g., Massachusetts' Connector ). There are private-sector companies that also serve the role of making various health insurance plans easier to compare for individuals and small groups (e.g., eHealthInsurance), available in most, but not all, states because of variation in states' regulations. Less than half of all small employers (less than 50 employees) offer health insurance coverage; such employers cite cost as the primary reason for not offering health benefits. One of the main reasons is a small group's limited ability to spread risk across a small pool. Insurers generally consider small firms to be less stable than larger pools, as one or two employees moving in or out of the pool (or developing an illness) would have a greater impact on the risk pool than they would in large firms. Other factors that impact a small employer's ability to provide health insurance include certain disadvantages small firms have in comparison with their larger counterparts: small groups are more likely to be medically underwritten, have relatively little market power to negotiate benefits and rates with insurance carriers, and generally lack economies of scale. Allowing these firms to purchase insurance through a larger pool, such as an Association, Gateway or an Exchange, could lower premiums for those with high-cost employees. Depending on the applicable state laws, individuals who purchase health insurance in the nongroup market may be rejected or face premiums that reflect their health status, which can make premiums lower for the healthy but higher for the sick. Even when these individuals obtain coverage, there may be coverage exclusions for certain conditions. Reforms affecting premiums ratings would likely increase premiums for some, while lowering premiums for others, depending on their age, health, behaviors, and other factors. States are the primary regulators of the private health insurance market, though some federal regulation applies, mostly affecting employer-sponsored health insurance (ESI).