House Releases Text of Reconciliation Bill; CBO Provides Final Cost Estimate

On Thursday, the House of Representatives released the amended Health Care and Education Affordability Reconciliation Act of 2010 (H.R. 4872), (pdf) the reconciliation bill that contains “fixes” to the Senate-approved Patient Protection and Affordable Care Act (H.R. 3590).  Earlier in the day, the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) released their preliminary cost estimate (pdf) of the total health care package, thus triggering the 72-hour waiting period before a vote can be held.

According to a section-by-section analysis of the reconciliation bill provided by the House Rules Committee, changes to the Senate bill include many endorsed by President Obama in his health care proposal.  For example, under the Senate bill, if any employee of a firm with 50 or more full-time workers obtains tax credits to purchase insurance through a health insurance exchange because the employer’s plan is considered unaffordable, the employer would pay, beginning in 2014, the lesser of $3,000 per full-time worker who obtains a tax credit or $750 times the total number of full-time workers. If the large employer does not offer insurance in the first place, it would need to pay $750 per full-time worker under the Senate bill if any employee obtains tax credits for the purchase of health care. The reconciliation bill includes Obama’s proposal, which would amend the Employer Responsibility section of the Senate bill by stipulating that the first 30 workers would be subtracted from the employer responsibility payment calculation. Therefore, a firm with 51 workers that does not offer coverage would pay an amount equal to 51 minus 30, or 21 times the applicable per employee payment amount. The reconciliation bill would raise the applicable payment amount for firms with more than 50 employees that do not offer coverage from $750 to $2,000 per full-time employee. In addition, the plan would eliminate the assessment for workers in a waiting period for enrollment, while maintaining the 90-day limit on the length of any waiting period beginning in 2014.

With respect to the contentious excise tax on high-cost “Cadillac” health insurance plans, the reconciliation bill delays the application of this tax until 2018, and increases the dollar thresholds of the 40% excise tax to amounts above $10,200 for single coverage, $27,500 for a family plan, $11,850 for retirees and $30,950 for employees in high risk professions. The reconciliation plan would also exclude stand-alone dental and vision plans from the excise tax, and permit an employer to reduce the cost of the coverage when applying the tax if the employer’s age and gender demographics are not representative of the age and gender demographics of a national risk pool. The dollar thresholds would be indexed to inflation and would be automatically increased in 2018 if the CBO turns out to be incorrect in its forecast of the premium inflation rate between now and 2018.

The reconciliation bill also delays the annual $2,500 limitation on contributions to health flexible spending arrangements and the elimination of the deduction for expenses related to the Medicare Part D prescription drug subsidy until 2013. The bill delays the excise tax on medical device manufacturers by two years and delays the industry fees on sales of brand name pharmaceuticals for use in government health programs by one year. Furthermore, the industry fee on health insurance providers would be delayed until 2014. The bill would also provide fee exemptions for voluntary employee benefit associations (VEBAs) and certain nonprofit providers.

The reconciliation bill also includes changes to the federal student loan program, which would shift the program to direct federal lending for postsecondary education. The CBO and JCT preliminary report predicts that the package – which includes the Senate health care bill plus the reconciliation proposal – would cost $940 billion over the coming decade and provide health insurance coverage to an additional 32 million people yet reduce the deficit by $138 billion over that period. The estimated “penalty” fees paid by employers from 2014 through 2019 would amount to $52 billion. Tax credits provided to small employers through 2019 are projected to total $40 billion.

The release of the amended reconciliation bill and the CBO estimate sets up likely votes on the health care package in the House this Sunday. The House is expected to vote on a rule to ”deem” the Senate bill passed as well as vote on the reconciliation bill. With all Republicans expected to vote against the measure, Democratic leadership is seeking to secure the necessary 216 votes in the House. If successful, the reconciliation bill will proceed to Senate next week under an expedited process requiring majority rather than supermajority support.

Photo credit: Andriy Solovyov

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.