Senate Finance Passes Healthcare Reform

On October 13, 2009, the Senate Finance Committee approved the revised Chairman’s Mark of the America’s Healthy Future Bill by a vote of 14 to 9. The vote was closely along party lines with one Republican joining with the majority. The legislation includes a tax on individuals without acceptable coverage, but also includes an affordability credit for low-income individuals. There is also a tax on employers electing not to provide health coverage to their employees, but there is also a small business employee health care coverage tax credit. These taxes are designed to promote the goal of maximum coverage. The definition of qualified medical expenses would be standardized and a credit would be created for developing new medical therapies.

Other tax provisions designed to produce revenue to help pay for healthcare reform include an excise tax on high-cost employer-provided insurance, limits on distributions from health accounts for over-the-counter medicines, an additional tax on nonqualified distributions from Health Savings Accounts, limits on contributions to Flexible Spending Accounts, and limits on the deduction of excessive executive compensation by insurance providers. Annual fees would also be imposed on manufacturers and importers of branded drugs, manufactured and importers of medical devices, and health insurance providers

Additional provisions would expand required reporting of payments to corporations for payments for goods and services and impose additional requirements on Code Sec. 501`(c)(3) hospitals.

There are significant differences between the House Ways and Means Committee version of the legislation and the Senate Finance version. The House is currently in the process of resolving differences between the committee-passed versions of the legislation and then moving to a floor vote. The Senate will now move to that next step as well. If both bodies are able to pass a version of the legislation, a conference committee will then be convened to resolve differences between the House and Senate versions. Congressional leaders are hopeful of completing action by the end of the year.