The Power of A

Over the past 24 hours, a series of events has moved the question of how to pay for health care reform to the forefront of the debate.  The following timeline shows how this issue has become the biggest roadblock to comprehensive health care reform:

•   On June 15, the Congressional Budget Office (CBO) sent a letter to Senator Kennedy (D-MA) and the Health Education Labor and Pensions (HELP) Committee scoring their draft proposal as costing $1 trillion over 10 years but only covering an additional 16 million Americans.  This plan lacked firm language on a public plan or an employer mandate
•   On June 16, CBO also released a score of an unreleased Senate Finance Committee proposal, placing its cost at $1.5 trillion over ten years.  Committee Chair Max Baucus (D-MT) responded that the scored proposal was two weeks old.
•   CBO also told the committee that the president’s plans for expanding health coverage would add to the nation’s federal debt without offsets.  The letter states “without meaningful reforms, the substantial costs of many current proposals to expand federal subsidies for health insurance would be much more likely to worsen the long-run budget outlook than to improve it.”

With these updates, the Democratic leadership has been exploring new ways to pay for their health care plans.  CongressDaily obtained a document circulated by Ways and Means Committee Democrats with a series of proposals to pay for their legislation.  In addition to listing removing the tax-exemption for employers and increasing the tax on soda and alcohol, the document lists the following new ideas as “pay-fors”:

- Reducing deductions taken by pharmaceutical companies for prescription drug advertising expenses
- A 2 percent surtax on individuals earning more than $200,000 and households with $250,000 or more in adjusted gross income
- A 0.375% increase in the Medicare tax on both employers and employees, which will be controversial with small businesses
- Valued-Added Tax (VAT) on goods and services similar to a tax imposed by most European countries.

Interestingly, the limit on charitable tax deductions proposed by the president is not in the document, likely due to the resistance from members of the caucus.

Quick Hits

CBO Director says health care reform is a “hard slog” in USA Today… House Energy and Commerce Committee will release health care bill Thursday or Friday and “it will include some numbers”… The House Republican task force on health care releases its health care outline (details from ASAE to come)… Former U.S. Senate majority leaders Howard Baker, Tom Daschle, and Bob Dole release their bipartisan health care reform plan.

On the heels of a New York Times story yesterday examining the impact of health care reform proposals on small businesses, the House Small Business Committee held a hearing to examine exactly that topic.

“While there is no silver bullet solution to America’s healthcare woes, there is opportunity for improving the system,” Chairwomen Nydia Velazquez said in her written statement. “At the end of the day, small businesses need options, and there are several out there. Whether it is pooling mechanisms, insurance exchanges or refundable tax credits, the one thing we know won’t work is the status quo. That has become abundantly clear.”

Testifying were five small business owners representing a variety of associations, including the U.S. Chamber of Commerce, the U.S. Women’s Chamber of Commerce, the National Federation of Independent Business, and the Printing Industries of America. Despite the variety of industries represented, all agreed on one point: health care costs were affecting their bottom line. Most of the witnesses endorsed the chairwoman’s Small Business CHOICE Act (HR 859) as a help for their concerns.

According to the National Small Business Association statistic (cited in the chairwoman’s remarks) 10% of small firms may drop employee health care coverage in the next year. If you are a small association, is your association (or an association/business/member you know) going to have to drop or significantly modify your health offerings for employees?

Quick Hits
President Obama’s letter to the Senate outlining his preferred health care reforms….Washington Post blogger Ezra Klein interviews White House economist Christine Roemer on health care…… an idea piece in The New Yorker suggests a way to reduce health care costs like the Mayo Clinic has done… Coverage of the Daschle-Leavitt debate on health care at the National Press Club….