CHN: Health Reform Inches Along in Congress

Both the House and Senate have made some progress on their respective health reform proposals, but the timetable has been pushed back a bit. Senate Majority Leader Harry Reid recently indicated that a floor vote will not occur until September but that the Senate Finance Committee will still vote before the summer recess, scheduled to kick off on August 7. Efforts still continue in the House to try to complete work on their bill before they leave town.
The Senate Health, Education, Labor and Pensions (HELP) Committee, after weeks of debate and considering hundreds of amendments, completed work on its proposal, the Affordable Health Choices Act. The bill was passed out of committee on a vote of 13-10 along party lines on July 15. The Congressional Budget Office estimates that 20 million fewer people would be uninsured as a result of the bill and that three-quarters of those who would remain uninsured would have incomes below 150 percent of the federal poverty line (FPL). Given that the Senate Finance Committee has discussed including an expansion of Medicaid to individuals with incomes up to 150 percent of FPL in its proposal, this could well mean that the majority of those currently uninsured could gain coverage through the proposals being weighed in the Senate.
On the House side, two of the three committees with jurisdiction over health reform completed work on their joint bill, the America’s Affordable Health Choices Act, H.R. 3200. In contrast to the Senate, which will have two separate bills that will have to be joined together at a later point, the Chairmen of the three House committees developed one unified bill which they introduced on July 14. Thus far, both the Ways and Means and Education and Labor Committees have approved H.R. 3200. No Republicans in either committee voted for the bill and a total of six fiscally conservative Democrats, three from each committee, joined the Republicans in voting against H.R. 3200. The Energy and Commerce Committee, which had suspended its mark-up, is expected to reconvene on Friday and may work into the weekend.

The House and Senate HELP proposals include many of the same elements. They both propose establishing health insurance exchanges where individuals will be able to shop for health plans. Among the plans that would be offered in the exchange would be a public plan. Subsidies would be offered on a sliding scale to individuals and families with incomes below 400 percent of FPL to help make coverage more affordable.  Insurance market reforms to eliminate discriminatory practices and guarantee coverage for everyone are also included. Both plans assume Medicaid expansions that would cover all individuals with incomes below a certain level. There are also requirements for individuals to have health plans and for employers to offer health insurance to their employees or to contribute to the cost of coverage. Hardship exemptions would be given to certain individuals who cannot afford coverage or who encounter other constraints. With all of the proposals being discussed advocates remain vigilant and continue to press for policies that extend quality and affordable coverage to everyone, that protect families and individuals from excessive out-of-pocket costs, and that ensure that no one loses coverage or benefits.  For a side-by-side comparison of the HELP and House bills see:
Paying for Health Care Reform.  Though there are sweeping reforms and policy changes embedded in the various proposals being discussed in Congress, the issue that has dominated the debate in recent weeks has been the cost of reform and how to finance the overhaul of our current health care system.

Advocates have long been pressing for fair and adequate revenue sources to pay a significant portion of the costs of reforming health care.  They got what they wanted in the revenue sections of H.R. 3200 drafted by the House Committee on Ways and Means.  Most of the revenues would be provided through an income tax surcharge for the wealthiest households.  Individuals with incomes below $280,000 would not be subject to the surcharge; nor would couples with incomes below $350,000.  In fact, well over 98 percent of taxpayers will not face the surcharge.

The surcharge is projected to raise more than $540 billion over 10 years, collected from the richest 1.3 percent of taxpayers, according to Citizens for Tax Justice.  Most of the revenues would come from the top 1 percent, a group with an average income of nearly $1.5 million each.  That group will have received $700 billion from 2001-2010 in tax breaks through the Bush era tax cuts, so even with this surcharge they will still be ahead.  (For more information and state breakdowns of which income groups will pay the surcharge, see Citizens for Tax Justice,

The surcharge would be applied progressively; couples with incomes of $350,000 – $500,000 would pay 1 percent; from $500,000 – $1 million, the surcharge is 1.5 percent, and couples with incomes above $1 million will pay 5.4 percent.  The legislation also strengthens the incentive for savings, providing that if savings measures are projected to achieve less than $150 billion over ten years, the 1 and 1.5 percent surcharge levels will rise to 2 and 3 percent.

Predictably, opposition has emerged.  A favorite offensive against the surcharge is that it would hurt small businesses, whose incomes are often reported in individual income tax forms.  However, experts including Congress’ Joint Committee on Taxation, the Brookings-Urban Institute Tax Policy Center, and Citizens for Tax Justice all agree that at least 95 percent of people with small business income will not be subject to the surcharge.

Members of the Senate Finance Committee have expressed an interest in getting more funding for health reform from health industry groups (physicians, pharmaceutical companies, medical device manufacturers, hospitals, etc.) before going to tax increases.  All of the proposals do seek some combination of savings from health care providers, requirements that most individuals and businesses pay towards their or their workers’ insurance, and other revenue sources.  The ultimate balance of such proposals is the crux of the battle in Congress now.  To the extent that powerful interests reduce the extent of progressive revenue sources as well as the extent of health industry savings, it is likely that fewer people will benefit from stable and affordable health coverage.

Some moderate Democrats as well as Republicans in the House have expressed concerns about the surcharge and what they perceive to be inadequate cost savings in H.R. 3200.  Groups participating in the Rebuild and Renew America NOW campaign are visiting congressional offices to urge support for the surcharge or other progressive proposals that would generate significant revenue, such as reducing the value of itemized deductions for upper income taxpayers or extending the Medicare tax to unearned income.  With a number of revenue proposals available, each generating hundreds of billions of dollars, Congress has the tools before it to craft a health reform plan that will provide stable, affordable care.  Whether it has the political will is not as clear.

Budget Report 2012 - Self-Inflicted Wounds