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Health Care Reform Sent Back to House for Vote on ‘Fixes’
By NYSSCPA.org Staff
Posted on 3/25/10

Certain provisions of the landmark health care reform bill, signed into law by President Barack Obama this past Tuesday, have been sent back to the House after Republican senators identified two minor violations of the reconciliation rules that allowed the measures to be passed in the first place, according to the Washington Post.

Democratic leaders said the provisions that will be struck—from the part of the bill dealing with Pell Grants for college students—do not significantly affect the student loan program or the health care bill overall, the Post reported.

The bill was passed by the House late Sunday night after the Senate had previously bypassed threats of a Republican filibuster through using the parliamentary procedure known as reconciliation, by which one can pass legislation with a simple majority.

Under the rules of reconciliation, though, once the president has signed the bill into law, the Senate must give final approval for any changes, or “fixes,” that were made by the House, a process that takes a minimum of 20 hours of debate and lots of votes, according to the Christian Science Monitor. Any changes to the bill mean that it must then be sent back to the House, where these changes must be voted on again.

This, according to the Associated Press, is precisely what happened when Senate Republicans were able to kill some language in the bill that relates to Pell grants for low-income college students. The Senate voted down 29 other Republican amendments to healthcare reform, with near-party-line votes, said the Monitor. Democrats described the two changes that the Republicans were able to get through as minor glitches, but did not rule out that GOP might be able to alter additional sections of the bill, the AP said.

Procedural issues were responsible for the parts that were successfully struck down, the New York Times reported. Due to these two successful challenges, the reconciliation bill will now have to be altered before going back to the House for a final vote.

The bill will bring about dramatic change in the way that Americans access and pay for health care by introducing a number of regulations and government programs directly affecting the health care sector itself. Although it will take until 2014 for the entirety of the bill to take effect, the White House said that immediate changes include:

  • a ban on health care insurers denying coverage to children based on pre-existing conditions (it will apply to adults in the future, according to the White House);
  • a provision that allows people to stay on their parent’s health care plans until the age of 26;
  • a ban on dropping people from insurance plans when they get sick;
  • a measure that provides tax credits to small businesses that offer coverage to their employees; and
  • a requirement that new private plans must provide free preventive care.

The bill, thousands of pages long, contains many other provisions in addition to these.

Impact on Taxes

The legislation also contains a number of tax measures intended to fund it, according to the Boston Globe. While there are many different revenue generators contained in the legislation, according to the Globe, some of them include:

  • The individual mandate: Starting in 2014 almost everyone will be required to maintain health insurance. Those who go without insurance will be subject to a tax of $695 per year.
  • Employer responsibility provisions: Large companies will be required to provide health insurance as a benefit to its employees. Companies that do not provide this benefit will be imposed a tax of $2,000 a year per employee.
  • The high-cost plan excise tax: Starting in 2018, high-cost health insurance plans will be subject to a tax. Plans for single persons that cost in excess of $10,200 and family plans that cost in excess of $27,500 are in this section’s crosshairs. The excise tax rate on incremental costs will be 40 percent. In an attempt to appease union dissent, this tax will not be assessed on the individual but will be assessed on the insurance company providing the plan. Ultimately, the costs will still be burdened by the purchaser.
  • Increased Medicare taxes: Medicare taxes will now be assessed on investment income for families making in excess of $250,000 and for singles making over $200,000. Investment income includes interest, dividends, capital gains, rental income and royalties. In the past, Medicare taxes had been assessed on wages only. This tax will commence January 1, 2013. In addition, the Medicare tax rate has also increased. This tax increases by a third, from 2.9 percent to 3.8 percent.
  • Taxes on pharmaceuticals and medical devices: Starting in 2011, the pharmaceutical industry will be subject to a $2.5 billion annual excise tax. The annual excise tax increases in subsequent years, rising to $4.2 billion in 2018. The tax is assessed based on a company’s market share and is nondeductible for federal tax purposes. Additionally, sales of medical devices will be subject to a 2.9 percent national sales tax. This will apply to sales occurring after Dec. 31, 2012.
  • Excise taxes on the insurance industry itself: Starting in 2014, the health insurance industry will be subject to an $8 billion annual excise tax. The excise tax increases to $11.3 billion annually for 2015, 2016, and 2017. The excise tax increases to $14.3 billion in 2018 and rises by inflation thereafter. The tax is assessed based on a company’s market share and is non-deductible for federal tax purposes.

Opposition Suits

Opponents of the bill are already working to repeal it, as attorneys general from 13 states have signed on to a lawsuit attempting to declare the court action unconstitutional, the AP reported. Florida Attorney General Bill McCollum is taking the lead in the lawsuit, according to the AP, and attorneys general from South Carolina, Nebraska, Texas, Michigan, Utah, Pennsylvania, Alabama, South Dakota, Louisiana, Idaho, Washington and Colorado joined the effort. Other GOP attorneys general may join the lawsuit later or sue separately, continued the wire service.

The lawsuit claims the health care bill violates the 10th Amendment, which says the federal government has no authority beyond the powers granted to it under the Constitution, by forcing the states to carry out its provisions but not reimbursing them for their costs, said the AP.

Virginia launched its own separate effort, according to the New York Times, which reported that its legislature recently enacted a measure that outlaws forcing individuals to purchase health insurance coverage. Democrats denounced a lawsuit, comparing the state government's defiance of compulsory individual insurance coverage in the new law with the angry reaction that met the Civil Rights Act in the 1960s.

Buoyed by the enactment of health-care legislation and an acknowledgment by some top Republicans that the initiative is likely to pass, the White House and congressional Democrats are intensifying their push to overhaul financial regulation, said the Wall Street Journal. The president has already met with Senate Banking Committee Chair Chris Dodd (D – CT), who said that Obama wants Congress to produce results soon on proposals to tighten federal oversight on banking and capital markets, said Reuters. Efforts at financial reform are already gathering opposition, particularly from the U.S. Chamber of Commerce, which released a series of ads attacking the House and Senate bills, said Reuters.