House Health Care Legislation Unveiled

Includes employer mandates, insurance policy mandates, premium and tax increases, and Medicare cuts 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 1,900 page legislation comes with a preliminary cost estimate from the Congressional Budget Office of $900 billion over the next ten years. The cost estimate only pertains to the expanded coverage and not other changes to existing programs, so the official price tag could significantly increase to over $1 trillion.  A major change from previous versions of the legislation is that many of the reform timeframes will be moved up, allowing democrats to enter the 2010 and 2012 elections with some achievements. 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. AGC supports health care reform that expands coverage and makes coverage more affordable. However, H.R. 3962 fails to reduce costs and address the rising cost of insurance. The current proposal will increase insurance premiums and will impose indirect tax increases on employers to pay for the reform.