On Sunday, March 21, 2010, the House passed the Senate-approved health care bill by a vote of 219-212.  The only bipartisanship support for the bill was in its opposition, as 34 Democrats voted along with all 178 Republicans voting NO.

The 34 Democrats who stood up against their party’s leadership and with the majority of Americans were: John Adler, Jason Altmire, Michael Arcuri, John Barrow Marion Berry (AR), Dan Boren (OK), Rick Boucher, Bobby Bright, Ben Chandler, Travis Childers, Artur Davis, Lincoln Davis, Chet Edwards (TX), Stephanie Herseth Sandlin, Tim Holden, Larry Kissell, Frank Kratovil, Daniel Lipinski, Stephen Lynch, Jim Marshall, Jim Matheson, Mike McIntyre, Mike McMahon, Charlie Melancon (LA), Walt Minnick, Glenn Nye, Collin Peterson, Mike Ross (AR), Heath Shuler, Ike Skelton, Zack Space, John Tanner, Gene Taylor and Harry Teague (NM).

The House then approved a bill of changes or “fix” to the Senate bill that now goes back to the Senate for their consideration under reconciliation (requiring only 51 votes). The Senators will begin tangling over the “fixer” or “reconciliation” bill. If the Senate makes any changes at all to the reconciliation package, it will have to go back to the House for yet another vote before going to the President for his signature. 

There are many concerns regarding the reconciliation bill, but below are some of the more troubling provisions for employers.  Please call your Senators today and encourage them to oppose these and other detrimental provisions in the House’s reconciliation bill under consideration this week (3.22.10) in the Senate.
 

1. Employer mandate: The penalty for the "free rider" increased from $750 per employee to $2000 per employee if you don’t offer insurance for more than 50 employees. If you do offer insurance, but the employee share of premiums is "unaffordable" (greater than 9.5% of income), and that employee goes into the exchange and receives a tax credit, your fine is $3000 per employee!!

2. For the first time, it uses part-time employees when calculating how many full time employees for that determination of "over 50 employees". The senate bill was silent on part-time workers.

3. A new 3.8% “Medicare” tax on non-wage income would be placed on high earners, income from interest, dividends, capital gains, and some profits from investments in partnerships and S-corporations. The revenues from the tax on unearned income would be credited to the Supplemental Medical Insurance trust fund. If the unearned income tax–and other proposed tax hikes on high-income individuals included in the President’s FY 2011 budget—become law, a high-income taxpayer could have an effective tax rate on capital gains and qualified dividends of 23.8 percent. Significantly, however, the effective tax rate on nonqualified dividends would be 43.4 percent.

4. The Cadillac tax on “high value” health plans is delayed from 2013 to 2018 - but it will now be only indexed to CPI inflation (Senate bill was CPI+1%). Since medical inflation is so much higher than CPI, this will, without a doubt, become the next Alternative Minimum Tax (AMT) and catch more and more plans every year.

5. While stating they have removed the “Cornhusker Kickback”, the reconciliation bill instead provides an expansion of the federal government’s reach into Medicaid, and obligates the federal government to pick up 90% of the cost of Medicaid expansion – forever.

6. The reconciliation bill also leaves in place special deals for Louisiana, Connecticut, the frontier states, and others, while adding in new special deals for states like Tennessee. 

From our early research, we have found employers with under 50 employees are not impacted too much, although there are some tax credit options for employers who choose to offer insurance. The Congressional Budget Office said the initial cost of the program will be $1 trillion over the next decade.

The following information is from The Wall Street Journal (3.22.10)

WHAT’S IN THE BILL

The $940 billion health-care overhaul will take nearly a decade to roll out in full. A look at the key parts of the bill and when they go into effect.

2010
Coverage

• Subsidies begin for small businesses to provide coverage to employees.
• Insurance companies barred from denying coverage to children with pre-existing illness.
• Children permitted to stay on their parents' insurance policies until their 26th birthday.

2011
Coverage

• Set up long-term care program under which people pay premiums into system for at least five years and become eligible for support payments if they need assistance in daily living.

Taxes and fees

• Drug makers face annual fee of $2.5 billion (rises in subsequent years).

2013
Taxes and fees

• New Medicare taxes on individuals earning more than $200,000 a year and couples filing jointly earning more than $250,000 a year.
• Tax on wages rises to 2.35% from 1.45%.
• New 3.8% tax on unearned income such as dividends and interest.
• Excise tax of 2.9% imposed on sale of medical devices.
• Cost control
• Medicare pilot program begins to test bundled payments for care, in a bid to pay for quality rather than quantity of services.

2014
Coverage

• Create exchanges where people without employer coverage, as well as small businesses, can shop for health coverage. Insurance companies barred from denying coverage to anyone with pre-existing illness.
• Requirement begins for most people to have health insurance. Subsidies begin for lower and middle-income people. People at 133% of federal poverty level pay maximum of 3% of income for coverage. People at 400% of poverty level pay up to 9.5% of income. (Poverty level currently is about $22,000 for a family of four.)
• Medicaid, the federal-state program for the poor, expands to all Americans with income up to 133% of federal poverty level.
• Subsidies for small businesses to provide coverage increase. Businesses with 10 or fewer employees and average annual wages of less than $25,000 receive tax credit of up to 50% of employer's contribution. Tax credits phase out for larger businesses.
• Taxes and fees
• Employers with more than 50 employees that don't provide affordable coverage must pay a fine if employees receive tax credits to buy insurance. Fine is up to $3,000 per employee, excluding first 30 employees.
• Insurance industry must pay annual fee of $8 billion (rises in subsequent years)

Cost control

• Independent Medicare board must begin to submit recommendations to curb Medicare spending, if costs are rising faster than inflation.

2016
Taxes and fees

• Penalty for those who don't carry coverage rises to 2.5% of taxable income or $695, whichever is greater.

2017
Coverage

• Businesses with more than 100 employees can buy coverage on insurance exchanges, if state permits it.

2018
Taxes and fees

• Excise tax of 40% imposed on health plans valued at more than $10,200 for individual coverage and $27,500 for family coverage.

—Sources: House bill; Kaiser Family Foundation 

For additional information visit the U.S. Chamber's Health Care Toolkit. 

USA Today timeline "Health care: What you could see." 

Another excellent article written by the Maryland Association CPAs entitled, Health care reform: What will change?