© 2009, CCH INCORPORATED. All Rights Reserved. A WoltersKluwer Company
Declaring the end of health insurance insecurity for all Americans, House leaders on July 14 introduced the America's Affordable Health Choices Bill of 2009 (HR 3200), a comprehensive reform bill that would raise approximately $581.1 billion over 10 years, mostly through a progressive tax on upper income individuals. The 1,018-page measure, which will be marked up by the House Ways and Means Committee on July 16, is also expected to cut Medicare spending by at least $500 billion.
Committee Chairman Charles B. Rangel, D-N.Y., told reporters that he is hopeful that the final Congressional Budget Office (CBO) estimate of the cost savings in the bill will be large enough to reduce the amount of revenue increases on wealthy Americans. A preliminary estimate of Medicare savings based on an earlier draft of the health care bill shows gross savings from the Medicare program of $500 billion over 10 years. The CBO estimate, released on July 8, shows that solvency of the Medicare Trust Fund would be extended by the bill.
Under HR 3200, approximately $544 billion in revenues would be raised through a surtax of 5.4 percent on married individuals with adjusted gross income (AGI) over $1 million beginning in 2011; a 1.5-percent surtax on incomes between $500,000 and $1 million; and a 1-percent surtax on incomes from $350,000 to $500,000. According to a committee explanation, the lowest two tax rates would be increased to 2 percent and 3 percent, respectively, if health care cost savings are not achieved by the bill.
House Majority Leader Steny H. Hoyer, D-Md., said that Congress is on schedule to pass a budget-neutral health care reform bill in 2009. The goal is to pass reform legislation in the House and Senate before the August recess, or the recess will be cancelled, said House Energy and Commerce Chairman Henry Waxman, D-Calif. Then, lawmakers hope to have a bill on the president's desk by the end of the first session of the 111th Congress, Waxman added. House Speaker Nancy Pelosi, D-Calif., said leaders are still negotiating for support from the fiscally conservative members of the Democratic Blue Dog Coalition. She predicted that the final legislation will have a strong public option plan.
President Obama, in a written statement, said the House proposal will "begin the process of fixing what's broken about our health care system" He noted that the legislation would "lower costs, provide better care for patients, and ensure fair treatment of consumers by the insurance industry."
Obama said the public option would make health care more affordable and that increasing competition by offering more choices will keep insurance companies honest. The president praised the three key committees involved in drafting the House bill for their "unprecedented cooperation."
GOP Weighs In
House Minority Leader John Boehner, R-Ohio, immediately criticized the measure, likening it to an unpopular proposal from President Clinton to tax BTUs that passed the House but died in the Senate. "During a deep economic recession, it is criminal malpractice for Democrats to push a government takeover of health care and a new small business tax that will destroy more American jobs," Boehner stated. Republican Study Committee Chairman Tom Price, R-Ga., said the Democrats' plan would interfere with patient care through a massive government takeover of health care. "To pay for this enormous growth of government-run medicine, they seek to ration services for America's seniors on Medicare and levy a massive new tax on American small businesses --our nation's leading engine for job creation," Price said.
Ways and Means Health Subcommittee Chairman Fortney Pete Stark, D-Calif., predicted that the reform bill will pass the House with only about six Republican votes. The measure also contains other tax provisions, which have already passed the House with some bipartisan support, including delaying implementation of worldwide allocation of interest (which raises $26.1 billion over 10 years), limiting the use of tax havens to avoid U.S. taxation by foreign multinational corporations ($7.5 billion over 10 years), and clarifying the use of the economic substance doctrine ($3.6 billion over 10 years). The measure also requires that employers with annual payrolls exceeding $250,000 would have to pay a payroll penalty of 2 percent if they do not provide health insurance. Firms with annual payrolls above $400,000 would pay an 8-percent penalty. Some small businesses would be eligible for a new small business tax credit to help them provide coverage for their employees.
According to a preliminary estimate from the CBO and the Joint Committee on Taxation released late on July 14, passage of the health reform measure would result in a net increase in federal deficits of $1,042 billion for fiscal years 2010 through 2019. According to the estimate, most of the increased deficit comes from $438 billion in additional federal outlays for Medicaid and $773 billion in federal subsidies that would be provided to purchase coverage through the new insurance exchanges. The other main element of the proposal that would increase federal deficits is the tax credit for small employers who offer health insurance, which is estimated to reduce revenues by $53 billion over 10 years, the estimate says.
Senate Reaction
The House plan to raise revenue through a surtax on the wealthy may be a nonstarter in the Senate as several members of the Senate Finance Committee let it be known that the provision had little support among senior lawmakers. "The House is the House. We in the Senate are a different institution," said Senate Finance Committee Chairman Max Baucus, D-Mont., when asked whether he could back a surtax on the wealthy. "I might not agree with their revenues in respect to a policy plan but we expect that there will be differences," Sen. Olympia J. Snowe, R-Maine, a well-known moderate on the committee, told reporters following a private meeting with Baucus. Sen. Ron Wyden, D-Ore., another member of the Finance Committee, said he did not "see any appetite for it" in the Senate. "I don't think it's very likely," added Senate Budget Committee Chairman Kent Conrad, D-N.D., also a member of the Finance panel.
Senate Democratic leaders are hoping to see health care reform draft legislation by July 16 or July 17, and a markup held the week beginning July 20, according to senior Democratic aides. However, Baucus was unwilling to commit to that deadline. Instead, he promised to have a bill completed before the Senate leaves on August 7 for its summer recess.
Meanwhile, the Senate Health, Education, Labor and Pensions (HELP) Committee plans to hold a final vote on its health care reform bill early on July 15. The panel late on July 13 approved an amendment that would lower drug costs by creating a pathway for the Food and Drug Administration (FDA) to approve new competitors for biologic drugs, such as vaccines and cancer drugs.
By Jeff Carlson, Stephen K. Cooper and Paula Cruickshank, CCH News Staff
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