Legislative News 5-09

 

House Health Care Legislation Unveiled

After weeks of behind-the-scenes negotiations, House Speaker Nancy Pelosi (D-Calif.) released legislation that will overhaul the nation's health care system. The nearly 2,000 page bill is estimated to spend over $1 trillion in the first ten years to subsidize health care for the uninsured. It will also create a government-run insurance program to compete against the private insurance market and shift individuals from private insurance to the government-run exchange; new insurance mandates and regulations would raise premiums; new taxes on individuals who purchase insurance and those who don't; and, new taxes and mandates on employers. The legislation fails to reduce costs or make coverage more affordable for the nation's employers.

The majority of the Affordable Health Care for America Act is financed through a surtax on married couples with adjusted gross incomes exceeding $1 million a year and individuals earning over $500,000 a year. The surtax is not indexed for inflation and would begin in 2011 at a 5.4 percent rate. Previous drafts of the legislation had thresholds of $280,000 for individuals and $350,000 for couples, but it was indexed for inflation. The tax will generate $460.5 billion, much of it from small business owners who are at the forefront of our economic recovery.

In addition to the surtax, businesses with a combined annual payroll exceeding $750,000 will be required to pay an 8 percent penalty for its uninsured workers. Employers who choose to offer coverage must contribute at least 72.5 percent of premiums for individuals and 65 percent for families. The legislation includes credits for small business but they provide small employers limited value.

The legislation contains a government insurance option and expands Medicaid. It also includes a corporate information reporting proposal, which would require reporting on most third party transactions, limit the amount employees can contribute to health care flexible spending accounts, end deductions companies can take for retiree prescription drug coverage, and increase penalties for nonqualified distributions from health savings accounts.