House Passes Healthcare Reform

Continuing to stay alive in its slow progress through Congress, the Affordable Health Care for America bill (H.R. 3962) passed another major hurdle with House passage on November 7, 2009 by a 220 to 215 vote. The Senate must still merge and pass its version of the legislation and then the two versions of the legislation must be merged in conference. The legislation imposes penalties on individuals and businesses that do not obtain health insurance for themselves or their employees. The legislation would put a limit on the additional out-of-pocket cost to individuals based on their income level. It would also eliminate or reduce the additional payroll tax penalty for smaller employers. The legislation also, unlike the versions in the Senate, imposes a 5.4 percent surtax on incomes greater than $500,000. It does not contain an excise tax on “Cadillac” health plans as contained in the Senate Finance version. The House bill also includes restrictions on Flexible Spending Accounts. Revenue raisers in the legislation not related to health care include a permanent repeal of the worldwide allocation of interest rules. Timing of Senate action remains unclear, but time appears to be running out, even if the Senate can pass its version, to get a conference agreement through both houses by the end of the year. With a very close vote in the House and a similar close vote expected in the Senate, the conference committee could face great difficulty in resolving the differences between the two versions while still maintaining the necessary votes in both bodies.