Pelosi Unveils 1990-Page Health Care Bill

Met with a small group of protesters, Speaker of the House Nancy Pelosi unveiled the new House Health Care Bill, crafted in smoke-filled rooms lacking the promised bipartisanship and ‘transparency’ we heard so much about…

House Health Care Proposal Facts 

On October 29, 2009, Speaker Pelosi introduced H.R. 3962, the Affordable Health Care for America Act.  The bill combines versions of H.R. 3200 that were approved by the Committees on Education and Labor, Energy and Commerce, and Ways and Means, as well as others negotiated behind closed doors.  The bill is expected to move to the floor the week of November 2.  While reports indicate the bill will cost $894 Billion, CBO’s score is not yet available.

Stated purpose: “To provide affordable, quality health care for all Americans and reduce the growth in health care spending, and for other purposes.”
 
Some Facts

• The centerpiece of the bill is government-run insurance that could cause as many as 114 Million Americans to lose their private coverage
• Onerous regulations on the private insurance market that will force individuals to purchase coverage through the government-run exchange
• Trillions in new federal spending that will explode the deficit and imperil long-term budget solvency
• Taxes on all Americans: individuals who purchase insurance, individuals who do not purchase insurance and millions of small businesses
• Cuts to Medicare Advantage that could result in higher premiums and dropped coverage for more than 10 million seniors
• The bill is 1,990 pages long
• $200 Billion additional spending in a separate 13-page bill to handle the “doc fix.” Adding this spending to the overall bill breaks Obama’s promise to the American people not to sign a deficit-increasing bill
• Page 1515 – Regulation of vending machines, to ensure everyone can see the nutrition labels on items before purchasing their food
• The bill omits original draft language ensuring “that essential benefits coverage does not lead to rationing of health care.” In other words, there is no longer a clear prohibition on the federal government rationing health care
• Nearly all of the additional coverage comes from a huge Medicaid expansion, which will further imperil states’ budgets.  Medicaid covers low-income Americans and states must provide a match to receive federal funding.

A Few of the Tax Hikes

Here’s the list of tax hikes included in H.R. 3962, the revised House version of Obamacare, otherwise known as “The Affordable Health Care for America Act.” The text of this bill runs to 1,990 pages, all of which can be read here in PDF format. The page number references to each of the tax hikes noted below correspond to those in the PDF.
 
Employer Mandate Tax: If an employer does not pay 72.5 percent of a single employee’s health premium, the employer must pay an excise tax equal to 8 percent of average wages.  Small employers (measured by payroll size) have smaller payroll tax rates of 0 percent (<$500,000), 2 percent ($500,000-$585,000), 4 percent ($585,000-$670,000), and 6 percent ($670,000-$750,000).    Individual Mandate Surtax: If an individual fails to obtain qualifying coverage, he or she must pay an income surtax 2.5 percent of adjusted gross income.

Medicine Cabinet Tax (Page 324): Non-prescription medications would no longer be able to be purchased from health savings accounts (HSAs), flexible spending accounts (FSAs), or health reimbursement arrangements (HRAs). Insulin excepted.

Cap on FSAs (Page 325): FSAs would face an annual cap of $2500 (currently uncapped).

Increased Additional Tax on Non-Qualified HSA Distributions (Page 326): Non-qualified distributions from HSAs would face an additional tax of 20 percent (current law is 10 percent). This disadvantages HSAs relative to other tax-free accounts (e.g. IRAs, 401(k)s, 529 plans, etc.)

Denial of Tax Deduction for Employer Health Plans Coordinating with Medicare Part D (Page 327): This would further erode private sector participation in delivery of Medicare services.

Surtax on Individuals and Small Businesses: Imposes an income surtax of 5.4 percent on MAGI over $500,000 ($1 million married filing jointly).

Excise Tax on Medical Devices (Page 339): Imposes a new excise tax on medical device manufacturers equal to 2.5 percent of the wholesale price. It excludes retail sales and unspecified medical devices sold to the general public.

Corporate 1099-MISC Information Reporting (Page 344): Requires that 1099-MISC forms be issued to corporations as well as persons for trade or business payments. Current law limits to just persons for small business compliance complexity reasons. Also expands reporting to exchanges of property.

Delay in Worldwide Allocation of Interest (Page 345): Delays for nine years the worldwide allocation of interest, a corporate tax relief provision from the American Jobs Creation Act

Limitation on Tax Treaty Benefits for Certain Payments (Page 346): Increases taxes on U.S. employers with overseas operations looking to avoid double taxation of earnings.

Codification of the “Economic Substance Doctrine” (Page 349): Empowers the IRS to disallow a perfectly legal tax deduction or other tax relief merely because the IRS deems that the motive of the taxpayer was not primarily business-related.

Application of “More Likely Than Not” Rule (Page 357): Publicly-traded partnerships and corporations with annual gross receipts in excess of $100 million have raised standards on penalties. If there is a tax underpayment by these taxpayers, they must be able to prove that the estimated tax paid would have more likely than not been sufficient to cover final tax liability.

Summary

“The bill just released by Speaker Pelosi fails on every front to achieve the real goal of all Americans: health care that is more accessible, more affordable, and higher quality. By placing over $200 billion in a separate bill to address Medicare payments to physicians, the Speaker is using the same absurd tactics that Democrats and Republicans shunned last week in the Senate.

“And by placing a new, massive spending burden on state budgets with the expansion of Medicaid, the Speaker has hidden the hundreds of billions in new state taxes that will be required– all at the expense of job creation, education, and public safety.  If the Speaker’s true intent was to give more power to Washington bureaucrats and lobbyists at the expense of American families, however, the bill can be viewed as a resounding success.”