One of the biggest points of contention in Senate Finance Committee's consideration of Max Baucus' health bill is the "individual mandate" requirement.
The GOP is challenging the mandate that everyone carry health insurance or face an excise tax on their income tax returns, The Wall Street Journal reports: "The criticism underscored Republican concerns that the legislation represents unwarranted government intrusion into private matters, and highlighted the partisan divide over the White House's top domestic priority. … Democrats are not likely to budge on having some type of penalty for those who don't carry insurance. They see the penalty as the best way to make sure no one skips coverage" (Hitt and Adamy, 9/23).
The New York Times reports that Baucus made some changes to his bill: "Mr. Baucus would cut the maximum penalty for people who do not have insurance, to $1,900 a year for a family, from $3,800 in his original proposal. The penalty would be an excise tax, collected by the Internal Revenue Service, and the Congressional Joint Committee on Taxation said it would hit some people with annual incomes of less than $200,000. One of Mr. Baucus’s changes Tuesday could profoundly alter the insurance market, now dominated by employer-sponsored plans. Under the proposal, it would be easier than in his original bill for people with access to insurance through their employers to obtain tax credits to help them buy coverage on their own, in new state-based exchanges" (Pear and Herszenhorn, 9/22).
ABC News highlights an exchange between some committee members and Sen. Chuck Grassley, R-Iowa, who says the penalty for not having insurance is indeed a tax (Stephanopoulos, 9/22).
In addition, CNNMoney reports that a tax on health insurers - for high-cost "Cadillac" plans would not be what it seems: "The proposed tax would apply in cases where the annual cost of individual coverage exceeds $8,000 or family coverage tops $21,000. Baucus said Tuesday that slightly higher limits would apply to plans covering workers in high-risk jobs and non-Medicare retirees. He also said that he would raise the insurer tax rate to 40% from 35%. But the proposed tax is not as direct as it sounds. It won't just hit plans considered 'overly generous' or 'fat.' And it's a cost that ultimately will be borne not by insurers but by employees through reduced benefits, a higher share of costs in their employer-sponsored plans or both. That was the consensus view expressed in CNNMoney.com's discussions with health, tax and corporate benefits experts" (Sahadi, 9/22).
The first amendment that the committee adopted was one that encourages innovative care for hospitalized Medicare patients, The Associated Press reports. "The amendment directs Medicare administrators to test projects at local hospitals to allow electronic monitoring of patients by specialists at high-quality health care centers" (9/22).
In other changes, Baucus has removed consumer items such as condoms and contact lenses from a proposed tax on medical devices after Republican criticism, The Associated Press reports in a second story, but he "left intact a $4 billion-a-year levy on the medical devices industry - keeping the controversy alive. The industry makes some 80,000 different products from heart valves to imaging machines to tongue depressors. The Congressional Budget Office said Tuesday such industry fees could eventually raise insurance premiums by roughly 1 percent" (Alonso-Zaldivar, 9/22).
Sen. John Kerry is concerned about the device tax, The Wall Street Journal reports in a separate story. "He argued that such a levy could discourage makers of medical equipment from creating better new products. "I don't want to see that innovation stifled," the former Democratic presidential candidate said. He has another reason to be concerned. Massachusetts is home to a slew of medical-device makers, including such biggies as Boston Scientific, which sells $8 billion of medical devices each year" (Adamy, 9/22).
A proposal in the committee would also cut back on tax-free flexible spending accounts, USA Today reports: "The legislation would limit FSA contributions to $2,000 a year beginning in 2013. And it would standardize the expenses that are qualified. … Other options exist for those who have chronic health conditions. They can itemize their taxes and include unreimbursed medical expenses that exceed 7.5% of their adjustable gross income. A different option, the health savings account (HSA), allows the pretax money to be rolled over from year to year. The disadvantage is that a worker must enroll in a high-deductible plan. This year, the minimum deductible is $1,150; for a family, it's $2,300. About 30% to 40% of large employers offer an HSA … Sometimes the employer puts seed money into the account for workers to make it attractive (Dugas, 9/23).
Meanwhile, Roll Call reports that the bill will now cost closer to $900 billion from the original $856 billion that was initially estimated (Drucker, 9/22).