But the bill would also dramatically expand federal regulation of health insurance for millions of Americans who cannot get benefits through work. Federal law would for the first time require insurance companies to cover all Americans, regardless of their health status, and would prohibit insurers from denying coverage to people who become sick.
Most individuals would be required to buy insurance or face a penalty of up to $750 per person. And large employers would have to provide employees with health benefits or contribute to the cost of insuring those who are eligible for federal assistance.
House Democrats included a much more stringent requirement on employers in the bill they passed last week.
Reid's bill parallels a provision in the House proposal that would open the nation's 44-year-old Medicaid insurance program for the poor to all Americans making less than 133% of the federal poverty line, slightly lower than the House threshold.
The government would also create new insurance marketplaces for those who do not get coverage through work.
Commercial insurers, as well as the government, would offer plans in these marketplaces, or exchanges, and be required to provide a minimum set of benefits, including mental health services, maternity care and preventive care.
The most expensive feature of Reid's proposal is a commitment by the federal government to provide subsidies for millions of Americans making less than 400% of federal poverty level who buy insurance in an exchange.
The bill is also designed to give relief to small businesses, with tax subsidies to help them offset the cost of offering their employees health benefits. And the legislation would make prescriptions more affordable for many seniors, though it would not close the Medicare drug coverage gap, known as the "doughnut hole," as the House legislation does.
To cover the cost of this expansion, Reid is relying on a new 40% tax on high-end, so-called "Cadillac" health plans worth more than $8,500 for individuals and $23,000 for families.
Individual taxpayers making more than $200,000 a year and couples making more than $250,000 would also be subject to a payroll tax that would hike the current 1.45% Medicare deduction to 1.95%.
The bill also includes a new 5% excise tax on elective cosmetic surgery that has not been in any previous health legislation.