The White House has published the
The package unites the versions of the health care package that the House and Senate passed last year, largely along party lines, but adheres mostly to the Senate version. The summit on Thursday is aimed at winning some Republican support for the package. That support is needed after the election of Scott Brown, R-Mass., to the late Edward Kennedys Senate seat. The White House hopes to avoid a filibuster, although Democrats could resort to a parliamentary strategy known as budget reconciliation to pass the legislation with less than 60 votes in the Senate.
Among the provisions is the excise tax on so-called Cadillac insurance plans, but with some changes to accommodate labor unions, who have concerns about taxes on the insurance plans they have won in collective bargaining with employers.
Beginning in 2018, the legislation would impose an excise tax on insurance companies to help finance the tax credits and other portions of comprehensive health reform. Under the new version, the excise tax would only apply to premiums above $27,500 for families and $10,200 for singles in 2018 and would be adjusted at the consumer price index plus one thereafter. The version of the tax passed by the Senate applied to premiums above $23,000 for families and $8,500 for individuals.
The excise tax includes important new permanent reforms that will focus its impact on plans that provide the highest-cost benefits not those that happen to cover the highest-cost workers, said the White House description of the tax. These include permanent adjustments based on age, gender and high-risk professions.
Other changes in the presidents proposal include creating a new Health Insurance Rate Authority to review and rein in unreasonable rate increases and other unfair practices of insurance plans. The White House proposal also eliminates the controversial provision from the Senate bill that would have exempted the state of Nebraska from paying for the expansion of Medicaid coverage, which had been inserted to win the support of Sen. Ben Nelson, D-Neb. The presidents proposal instead provides additional federal financing to all states for the expansion of Medicaid. For seniors, the proposal also completely closes the Medicare prescription drug donut hole coverage gap.
In addition to the excise tax on high-value insurance plans, the proposal aims to raise revenue to pay for the cost of health reform by improving enforcement and closing loopholes in the Tax Code. These measures include expanding corporate information reporting requirements, closing a loophole that allows certain byproducts of paper production to be eligible for the cellulosic biofuels producer credit, and helping prevent tax shelters by clarifying the definition of when activities have true economic substance beyond evading taxes.
Under current law, workers who earn a salary pay a flat tax of 1.45 percent of their wages to support the Medicare Hospital Insurance Trust Fund, but those who have substantial unearned income do not. To remedy this, the bill includes an additional 0.9 percent tax for households with incomes exceeding $200,000 for singles and $250,000 for married couples filing jointly. In addition, it would add a 2.9 percent tax for such high-income households to unearned income including interest, dividends, annuities, royalties and rents (excluding income from active participation in S corporations).
The proposal would also impose fees on various sectors of the health industry. These include a fee on branded prescription drug pharmaceutical companies in proportion to their federal sales, an excise tax on medical devices, an annual fee on health insurance companies, and an excise tax on indoor tanning services.
The proposal would impose an additional 10 percent penalty on non-health withdrawals from health savings accounts and Archer medical savings accounts; limit flexible spending accounts under cafeteria plans to $2,500; eliminate, starting in 2012, the deduction for employer subsidies for retiree drug coverage under Part D; raise the floor on the itemized deduction for major medical expenses to 10 percent of adjusted gross income for the non-elderly and non-disabled; and limit excessive compensation paid by certain health insurance companies.
The proposal would also establish a number of new tax benefits, beyond the ones for individuals and small businesses contained in Title I. These include the exclusion from income of certain health benefits provided by Indian tribal governments, the establishment of simple cafeteria benefit plans for small businesses, a qualifying therapeutic discovery project tax credit, the exclusion from income of assistance provided to participants in state student loan repayment programs for certain health professionals, and expansion of the adoption credit and adoption assistance programs.
