With the Capital building as a backdrop, the House speaker, Nancy Pelosi (D-CA) on Thursday unveiled HR-3962, the Affordable Health Care for America Act.


Like it or not, here it is.

If placed upon the floor, the 19 pound bill, all 1,990 pages of it, would stand nearly 9 inches tall. According to the CBO, the cost of the plan will be $1.055 trillion over the next ten years.

However, a November 2, 2009, AP news report says Democrats added billions more on higher spending for public health, a reinsurance program to hold down retiree health costs, payments for preventive services and more. The report says according to numerous Democratic officials and figures contained in an analysis by congressional budget experts the health care bill headed for a vote in the House in the first week of November will cost $1.2 trillion or more over a decade.

The bill is a combination of H.R. 3200, America’s Affordable Health Choices Act (approved by the Committees on Education and Labor, Energy and Commerce, and Ways and Means) and includes other provisions negotiated last week behind closed doors by the Democrat leadership.

Replacing HR-3200, it is certainly no shorter and no less complex. HR-3962 is a government-sponsored plan to take over the health insurance industry. The bill is designed to force Americans to pay for cradle-to-grave health care services as defined by the United States government and penalizes both employer and the individual for non-participation in the form of “surtaxes.”

HR-3962 is expected to come to the floor of the House the week of November 2.

The House and Senate Versions

The House bill is very similar to a measure under development by the Senate majority leader, Harry Reid of Nevada, who is seeking to combine bills passed by two committees. The bill would impose a new income surtax on individuals earning more than $500,000 and couples earning more than $1 million which is being labeled as a millionaire’s tax.


Nancy Pelosi at the unveiling of HR-3962 on October 29, 2009

The Senate bill would impose a tax on high-cost insurance policies, a move that experts say could help lower long-term health care costs by giving employers, employees and private insurers incentive to reduce expenditures.

In addition to expanding coverage for the uninsured, both the House and Senate versions of the legislation would severely tighten restrictions on the health insurance industry, for instance, by barring the denial of coverage based on pre-existing medical conditions.

Democrats have insisted that the health care legislation is crucially needed while Congressional Republicans warn that it will raise taxes, unwisely cut Medicare services and increase health care costs overall.

“That’s hardly the reform the American people need or deserve,” House Republicans said in a news release.

In summary, the bill contains the following points.

* Creation of a government-run health insurance program – potential to cause 114 million Americans to lose their current coverage.

* Forcing of individuals to purchase government-run Exchange – private health insurance industry will be forced out of business.

* Employers would be encouraged to drop existing coverage, due to regulations that would raise premiums.

* New federal spending (Trillions of dollars) and increased deficit will affect long-term fiscal solvency of America.

* Taxes will be levied on Americans who purchase insurance, Americans who do not purchase insurance and millions of small businesses – leading to job losses and increased healthcare premiums.

* Cuts to Medicare Advantage plans will result in increased premiums and more than 10 million seniors having their coverage dropped.

Penalties for non-participation

Section 59B on page 297 of HR-3962 spells out the rules for individual participation and explains how the individual will be taxed as a penalty if the individual fails to enroll in a health care plan. This idea is based upon making the plan more affordable for all, however, the bill makes no provision for that.


(a) TAX IMPOSED.In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax equal to 2.5 percent of the excess of
(1) the taxpayer’s modified adjusted gross income for the taxable year, over
(2) the amount of gross income specified in section 6012(a)(1) with respect to the taxpayer.

Individuals will be taxed 2.5% of their adjusted gross income if they do not purchase “acceptable health care coverage.” For many who cannot afford coverage, the fine is also out of reach.

Taxes will increase for both individuals and small businesses. The claim is that the taxes are being charged to offset the cost of the federal government financing the takeover of the health care industry, however, the bill states any amount collected as penalty “shall be deposited as miscellaneous receipts in the Treasury of the United States.’’ There is no mention of deposits to be made outside of the Treasury.

Small businesses will see a 5.4 percent “surtax” that will begin in 2011 and existing tax-exempt health savings programs will be eliminated. Beginning in 2013 a 2.5% excise tax will be added to all medical devices.

More New Taxes

Grace Period For Current Employment Based Health Plans (Page 92):

In General the Commissioner shall establish a grace period whereby, for plan years beginning after the end of the 5-year period beginning with Y1, an employment-based health plan in operation as of the day before the first day of Y1 must meet the same requirements as apply to a qualified health benefits plan under section 201, including the essential benefit package requirement under section 221.

This is interpreted to mean that after a 5-year period of time, people will be transferred into a health care plan defined by the government and not get to purchase private health insurance different from what the government provides.

With all plans being equal and with the government being the largest provider, the implication is that private insurers will not be able to compete effectively and consequently the private sector health care providers will be forced out of business. This leaves the federal government as the sole provider.

Employer Mandate Excise Tax (Page 275): If an employer does not pay 72.5 percent of a single employee’s health premium (65 percent of a family employee), the employer must pay an excise tax equal to 8 percent of average wages. Small employers (measured by payroll size) have smaller payroll tax rates of 0 percent (<$500,000), 2 percent ($500,000-$585,000), 4 percent ($585,000-$670,000), and 6 percent ($670,000-$750,000).

Individual Mandate Surtax (Page 296): If an individual fails to obtain qualifying coverage, he must pay an income surtax equal to the lesser of 2.5 percent of modified adjusted gross income (MAGI) or the average premium. MAGI adds back in the foreign earned income exclusion and municipal bond interest.

Medicine Cabinet Tax (Page 324): Non-prescription medications would no longer be able to be purchased from health savings accounts (HSAs), flexible spending accounts (FSAs), or health reimbursement arrangements (HRAs). Insulin excepted.

Cap on FSAs (Page 325): FSAs would face an annual cap of $2500 (currently uncapped).

Increased Additional Tax on Non-Qualified HSA Distributions (Page 326): Non-qualified distributions from HSAs would face an additional tax of 20 percent (current law is 10 percent). This disadvantages HSAs relative to other tax-free accounts (e.g. IRAs, 401(k)s, 529 plans, etc.)

Denial of Tax Deduction for Employer Health Plans Coordinating with Medicare Part D (Page 327): This would further erode private sector participation in delivery of Medicare services.

Surtax on Individuals and Small Businesses (Page 336): Imposes an income surtax of 5.4 percent on MAGI over $500,000 ($1 million married filing jointly). MAGI adds back in the itemized deduction for margin loan interest. This would raise the top marginal tax rate in 2011 from 39.6 percent under current law to 45 percent—a new effective top rate.

Excise Tax on Medical Devices (Page 339): Imposes a new excise tax on medical device manufacturers equal to 2.5 percent of the wholesale price. It excludes retail sales and unspecified medical devices sold to the general public.

Corporate 1099-MISC Information Reporting (Page 344): Requires that 1099-MISC forms be issued to corporations as well as persons for trade or business payments. Current law limits to just persons for small business compliance complexity reasons. Also expands reporting to exchanges of property.

Delay in Worldwide Allocation of Interest (Page 345): Delays for nine years the worldwide allocation of interest, a corporate tax relief provision from the American Jobs Creation Act

Limitation on Tax Treaty Benefits for Certain Payments (Page 346): Increases taxes on U.S. employers with overseas operations looking to avoid double taxation of earnings.

Codification of the “Economic Substance Doctrine” (Page 349): Empowers the IRS to disallow a perfectly legal tax deduction or other tax relief merely because the IRS deems that the motive of the taxpayer was not primarily business-related.

Application of “More Likely Than Not” Rule (Page 357): Publicly-traded partnerships and corporations with annual gross receipts in excess of $100 million have raised standards on penalties. If there is a tax underpayment by these taxpayers, they must be able to prove that the estimated tax paid would have more likely than not been sufficient to cover final tax liability.

The Wall Street Journal calls HR-3962 “The Worst Bill Ever”

A Recent WSJ opinion piece characterizes the bill as irrational and points to higher insurance premiums with the spectre of higher taxes and a rising federal deficit. By all accounts, this bill should have never seen the light of day.

With a nation already facing a burgeoning national debt brought on by Obama’s out-of-control spending policies, Nancy Pelosi’s health care bill will expand over time and result in subsequent higher taxes and requiring an expanding government to support it.

In control of both the House and the Senate, the Democrats are hell-bent upon passing this wildly unpopular bill in spite of the real possibility they may lose seats. This suits Nancy Pelosi who leads the party intend upon shoving their unique version of health care coverage down the throats of the rest of the nation. What the Democrats don’t seem to be able to understand is that while they blindly chase their ideas of health care entitlement they actually pull the plug on the fiscal health of the nation, placing the future of America’s freedom and prosperity in peril.

To afford rising taxes to pay for a bulging deficit in addition to paying for Nancy’s health care program, the economy will no doubt shrink in response to Americans pulling in the reigns of their household budgets. The bill not only affects the private worker, it also places new tax burdens upon business. The domino-like effects should be obvious. The irony here is that many more Americans may no longer be in a position to afford health care.

The Republican Plan

On November 5, 2009, House Republicans presented their health care plan.

The bill that would reward states for reducing the number of uninsured, limit damages in medical malpractice lawsuits and allow small businesses to band together and buy insurance exempt from most state regulation.

In its opening section, the Republican bill, which has no chance of passing, promises to lower health care costs and expand insurance coverage “without raising taxes, cutting Medicare benefits for seniors, adding to the national deficit, intervening in the doctor-patient relationship or instituting a government takeover of health care.”

The bill defines the differences between Republicans and Democrats, who intend to take up their bill on the House floor this week, after resolving intramural disputes over abortion and immigration.

Unlike the Democrats’ strategy of trying to provide near-universal coverage and force other major changes to the insurance system, the Republican approach is an incremental one with a different goal — controlling health care costs.

GOP lawmakers propose to do so through market-oriented measures that would limit medical malpractice lawsuits, expand the use of tax-sheltered medical savings accounts, let people shop for insurance outside of their own states and make it easier for small businesses and hard-to-insure people to get coverage. The ideas reflect conservatives’ suspicion of sweeping new programs, federal spending and additional regulation.

The Republican bill differs from the Democratic measure in that it would not require people to obtain insurance or require employers to offer it. It is almost surely cheaper than the House Democrats’ bill because, unlike that proposal, it would not expand Medicaid or offer federal subsidies to low- and middle-income people to help them buy insurance. Nor would the Republican bill impose new taxes.

The House Republican bill would not explicitly prohibit insurers from denying coverage to people because of pre-existing medical conditions, even though many Republicans have said they agree with Democrats that the federal government should outlaw such denials

The House Republican leader, Representative John A. Boehner of Ohio, said his bill would “lower costs and expand access at a price our nation can afford.”

In a few ways, the House Republican bill resembles the one headed for the House floor. It would allow young adults to stay on their parents’ health plans at least through age 24, compared with 26 under the Democrats’ bill.

House Republicans, like the Democrats, would prohibit insurers from imposing annual or lifetime limits on spending for covered benefits. And they would prohibit insurers from canceling or rescinding coverage after a person became sick unless the person had intentionally concealed “material facts” about a medical condition.

The bill would offer $50 billion in federal “incentive payments” over the next 10 years to states that reduce the cost of health insurance or the proportion of their residents who are uninsured.

The bill would also make it easier for insurers to sell insurance across state lines. Policies would be subject to laws in a company’s home state, but would be exempt from many of the consumer protection laws, rating rules and benefit mandates in other states where the company sold coverage.

Republicans would also allow small businesses to pool their insurance buying power through “association health plans,” sponsored by trade and professional associations and chambers of commerce. These plans would have “sole discretion” over what services to cover.

The GOP plan is, by design, a less costly bill with more modest ambitions. Its price tag, which is still to be determined, surely will be far less than the House Democratic bill. According to the nonpartisan Congressional Budget Office, the cost of that plan would exceed $1 trillion over 10 years.

Unlike the Democratic plan, it does not include subsidies or other provisions that would make coverage more affordable to people of modest means.

“What we’ve learned over many, many years is that the reason people don’t have insurance is that they can’t afford it,” said Drew Altman, president of the Henry J. Kaiser Family Foundation, an nonpartisan health policy research group. “You can’t make much progress toward helping the uninsured unless you help them buy it.”

The Republicans’ proposals long have been on their wish list, yet they were not enacted even when the party controlled Congress and the White House. And they are being resurrected at a time when some Republicans warn that the party is in danger of being seen as guardians of an unpopular status quo in health care.

“Come campaign time, voters need to know what healthcare reforms Republicans have supported,” said Whit Ayres, a GOP pollster.

Republicans, who harbor no hopes of passing their alternative plan during Saturday’s scheduled debate, have spent months criticizing the Democrats’ plan as an intrusive, expensive government program — an argument with strong appeal for the party’s conservative base.

The Republican bill lacks many major elements of the Democratic proposal: There is no expansion of Medicaid, no requirement that individuals buy insurance, no penalties for employers that do not offer coverage, and no subsidies to help the needy pay premiums.

In addition, the GOP proposal does not include one of the most popular elements of the Democrats’ plan — a ban on denying coverage to people with preexisting medical conditions.

But the Republican plan has adopted some of the more modest Democratic provisions. It too would make it easier for young adults to remain on their parents’ health policies. It also would end the controversial insurance practices of imposing annual or lifetime limits on benefits and of canceling coverage after a policyholder becomes sick.

And rather than give more power to the federal government to address the nation’s healthcare problems, the Republican plan looks to states, market forces and individuals.

Their bill would offer $15 billion in aid to the states to form “high-risk” insurance pools that would cover people — including those with preexisting conditions — who cannot get coverage through their jobs or in the individual market. The GOP bill also would provide incentive grants for states that reduce premiums and the ranks of the uninsured. Under a reinsurance program, a state pays a large share of the cost if claims — for an individual or a group — exceed some threshold.

The House Republican whip, Eric Cantor of Virginia, said high-risk pools and reinsurance programs would “guarantee that all Americans, regardless of pre-existing conditions or past illnesses, have access to affordable care.” Health policy experts say insurers can lower premiums if state reinsurance programs protect them against the risk of catastrophic costs.

Small businesses would be encouraged, but not required, to cover their employees under provisions that would make it easier to band together to get group rates.

To curb costs through increased competition, the GOP plan would make it easier for insurance companies to sell policies across state lines. The bill would impose new curbs on medical malpractice lawsuits — on the theory that health care inflation is fueled by defensive medicine and the rising cost of malpractice insurance. The provision sets a $250,000 limit on non-economic damages, for physical and emotional pain and suffering. It would establish new hurdles for consumers to obtain punitive damages and would limit contingency fees for plaintiffs’ lawyers.

To increase incentives for individuals to control their own health spending, the bill would expand the use of tax-favored health savings accounts. And it would allow employers to provide steeper discounts in insurance premiums to employees who adopt healthy lifestyles.

House GOP Health Bill Would Reduce Uninsured by 3 Million

Congressional budget umpires say the House Republican health plan would only make a small dent in the number of uninsured Americans.

In an analysis released late Wednesday, the Congressional Budget Office said the GOP plan would reduce the number of uninsured by 3 million.

The Democratic bill, by comparison, would reduce the number of uninsured by 36 million. Both estimates are for the year 2019.

While the Democrats’ bill would cover 96 percent of eligible Americans, the Republican alternative would cover 83 percent — roughly comparable to current levels.

The budget office says the Republican plan would reduce federal deficits by $68 billion over the 10 year period, and push down premiums for privately insured people.

CBO: Republican health plan would reduce premiums, cut deficit

The Congressional Budget Office Wednesday night released its cost analysis of the Republican health care plan and found that it would reduce health care premiums and cut the deficit by $68 billion over ten years.

The Republican plan does not call for a government insurance plan but rather attempts to reform the system by creating high-risk insurance pools, allowing people to purchase health insurance policies across state lines and instituting medical malpractice reforms.

“Not only does the GOP plan lower health care costs, but it also increases access to quality care, including for those with pre-existing conditions, at a price our country can afford,” House Minority Leader John Boehner, R-Ohio, said.

According to CBO, the GOP bill would indeed lower costs, particularly for small businesses that have trouble finding affordable health care policies for their employees. The report found rates would drop by seven to 10 percent for this group, and by five to eight percent for the individual market, where it can also be difficult to find affordable policies.

The GOP plan would have the smallest economic impact on the large group market that serves people working for large businesses that have access to the cheapest coverage. Those premiums would decline by zero to 3 percent, the CBO said.

The analysis shows the Republican plan would do little to expand coverage, which Democrats were quick to point out in a late night missive to reporters.

“Here’s the Bottom line – Americans lose and Insurance companies win under the Republican plan,” Pelosi spokesman Nadeam Elshami said.

The CBO found that under the Republican plan, insurance coverage would increase by about 3 million and that the percentage of insured non-elderly adults would remain at about 83 percent after ten years. The House bill would increase coverage to an additional 36 million people, raising the number of insured to 96 percent.

The CBO put the price tag for the GOP plan at $61 billion, a fraction of the $1.05 trillion cost estimate it gave to the House bill that lawmakers are set to vote on this weekend. And the CBO found that the Republican provision to reform medical malpractice liability would result in $41 billion in savings and increase revenues by $13 billion by reducing the cost of private health insurance plans.

What Happens Now?

In the first week on November, House leaders plan to take up the bill introduced Thursday while Senate Majority Leader Harry Reid aims to unveil a bill to bring to Senate floor by early November. The bill must get 60 votes to open debate, which will without doubt prove to be lengthy. It may well consume much of November and perhaps may go into December.

Beyond that time, if a full Senate and House both pass bills, they hold a conference committee to work out differences which leads to next year as the soonest when President Barack Obama can sign the resulting bill into law.

The bill represents the latest attempt to overhaul America’s health care system.

1. Think Progress notes with glee that Sec. 107 outlaws treating domestic violence as a pre-existing condition. Do you even know what to think of that?

2. The Weekly Standared weighs in saying that HR 3962 pays for abortions, cuts medicare, raises taxes + fees + the deficit. What’s not to love?

3. The Washington Times reports that the House unveiling ceremony for HR 3962 was closed to the public. I repeat, it was closed to the public. Vistitors had to be listed on a pre-approved list.

4. American Spectator points out that HR 3962 includes a mandate that forces individuals to purchase insurance or pay a tax + the employer mandate. It also includes government-run insurance exchanges. American Spectator also shows that the bill will add a huge new section to the federal tax code: PART VIII: HEALTH CARE RELATED TAXES. Can you imagine this ambiguous section of the code not changing every year? Your liberty is at stake.