The fifth and final Congressional committee with jurisdiction over health care reform is poised to approve its version of reform next week, bringing the nation a step closer to a goal that has eluded lawmakers and Presidents for a century. The Senate Finance Committee bill would increase the number of Americans with health insurance from 83 percent to 94 percent and will not increase the budget deficit, according to the Congressional Budget Office.
Three committees in the House of Representatives and the Senate Health, Education, Labor and Pensions (HELP) Committee have all approved health care reform bills. Approval of a bill by the Senate Finance Committee will be an important breakthrough, partly because it is the most conservative of the five committees.
After the Finance Committee approves its bill, the next step will be for Senate leaders and the chairmen of the HELP and Finance Committees to combine the two versions into a bill that will be brought to a vote on the Senate floor. A similar process is currently taking place in the House, where leaders need to combine the three committee bills into one that can be passed on the House floor.
Dispute in the Senate Over Taxing Health Care Benefits and other Revenue-Raisers
The Senate Finance bill includes an excise tax on insurance companies equal to 40 percent of any premiums they charge over certain thresholds ($8,000 for plans for individuals and $21,000 for plans for families). The idea behind this tax is to discourage the use of high-cost health insurance plans, often called "Cadillac plans." As we've reported before, there is a dispute over whether expensive plans really represent over-consumption of health care or merely represent people with greater health risks being charged more for insurance.
Some adjustments were made to the excise tax during the Finance Committee markup. One raises the premium thresholds for the excise tax for people in high-risk jobs and people over age 55. (The thresholds would be $1,850 higher for individuals and $5,000 higher for families.)
The initial proposal from the Finance Committee's chairman, Max Baucus (D-MT) would have required people to obtain health insurance unless there was no policy available that cost less than 10 percent of their adjusted gross income (AGI). One amendment adopted in committee lowered that threshold to 8 percent of AGI. The penalties for individuals without health insurance were also changed to be lower and phased in over time, so that the bill now would create maximum penalties of $200 in 2014, gradually rising to $750 in 2017.
Several Senators have expressed interest in offering amendments on the Senate floor that would do more to make health care affordable for working families. The costs of any such amendment must be offset by revenue-raising provisions. Some of the revenue-raising provisions that were discussed among Finance Committee members and which could be proposed as amendments on the floor were recently analyzed by Citizens for Tax Justice. They include reforming the Medicare tax so that it no longer exempts investment income and limiting itemized deductions for very wealthy taxpayers, among others.
Other issues not related to taxes could receive more attention over the next couple weeks. For example, the Finance Committee bill is the only of the five bills that does not include a public option, which most health experts believe will reduce the overall costs of health care reform.
More Progressive Revenue Provision in House Bill
The revenue-raiser in the House bill is a graduated surcharge on adjusted gross incomes above $280,000 for singles and $350,000 for married couples. There has been some talk of changing the surcharge so that it only applies to AGI above $500,000 for singles and $1 million for married couples. This change is unnecessary, and CTJ has calculated that it would reduce the revenue from the surcharge by over 18 percent. (These variations on the surcharge are also analyzed in CTJ's recent report on revenue options for health care.)