House Panels Begin Markup of Health Care Reform Legislation

On Wednesday and Thursday, the House Education and Labor and Ways and Means committees, respectively, began their markups on the chamber's reform bill (HR 3200), in the face of bipartisan criticism, CQ HealthBeat reports.

The Education and Labor Committee -- which heard opening statements on Wednesday -- is expected to discuss issues in the $1 trillion bill such as:

• An employer mandate, any provisions that come under the Department of Labor's jurisdiction;
• The design of a national health insurance exchange that would host both public and private plans; and
• Whistle-blower provisions.

Aides said the committee might be able to conclude its work by Thursday evening, depending on how many amendments are offered by Republicans.

The Ways and Means Committee was scheduled to begin its markup on Thursday (Norman, CQ HealthBeat, 7/15).

Some Not on Board

After House leaders unveiled their proposal on Wednesday, they immediately were met with a "firewall of resistance" to certain portions of the legislation, Roll Call reports.

According to Roll Call, moderate Democrats and some "vulnerable freshman" lawmakers objected to the bill's proposal to fund reform via a surtax on high-income U.S. residents and small businesses, while other lawmakers said they want more cost-cutting even if it results in more U.S. residents remaining uninsured (Dennis/Newmyer, Roll Call, 7/16).

CQ HealthBeat reports that although many House Democrats support the bill, some still are seeking a single-payer system in the legislation.

Some Republicans have criticized the surtax and the bill's public plan option (Norman, CQ HealthBeat, 7/15).

In addition, members of the Congressional Tri-Caucus -- comprised of the Asian Pacific American, black and Hispanic caucuses -- have said the anti-discrimination clause in the bill should be stronger.

Del. Donna Christensen (D-V.I.), co-chair of the Congressional Black Caucus' Health and Wellness Task Force, said her group wants the bill to go further in addressing health care disparities across minority populations (Roll Call, 7/16).

Outside experts also have voiced concerns with the legislation.

Sally Pipes, president of the California think tank Pacific Research Institute, said the overhaul proposed by the House would lead to a government-run system with high costs and rationed care. She recommended that Congress lessen government involvement in health care and reduce coverage mandates for insurance companies, allowing insurance companies to offer a wider variety of plans across state lines to give consumers more choice (Stephenson, CQ HealthBeat, 7/15).

Energy and Commerce Hearing

According to the AP/Atlanta Journal-Constitution, the House Energy and Commerce Committee -- the third committee responsible for the House reform bill -- also is scheduled to consider the bill on Thursday.

However, the committee likely will face a more difficult path to a vote because the fiscally conservative Blue Dog Coalition holds enough seats on the committee to block approval. The Blue Dogs are critical of the cost of the bill and oppose the surtax provision, among other issues.

Rep. Mike Ross (D-Ark.), chair of the Blue Dogs' health care task force, said the group would need to see significant changes in the legislation to protect small businesses and rural providers, as well as to contain costs, before the coalition would approve the legislation (Werner, AP/Atlanta Journal-Constitution, 7/16).

Surtaxes Incite Criticism

The surtax provision within the House reform proposal has incited rancor from both sides of the aisle and has come under criticism from organizations that represent small businesses, according to CQ Today.

The surtax would begin in 2011 and apply to U.S. residents whose annual adjusted gross incomes are higher than $280,000 and married couples whose annual AGIs are higher than $350,000.

Individuals whose annual AGIs are higher than $400,000 and couples whose annual AGIs are above $500,000 would face a 1.5% surtax. Individuals whose annual AGIs are higher than $800,000 and couples whose annual AGIs are higher than $1 million would be subject to a 5.4% surtax.

Republicans argue that the surtaxes would negatively affect small businesses because income from sole proprietorships, farms, partnerships and some small corporations are reported directly on owners' individual tax returns.

However, Democrats have said the surtaxes are an attempt to have high-income U.S. residents pay their fair share for reform after they received substantial tax breaks during the Bush administration.

Rep. Chris Van Hollen (D-Md.) noted that the tax would apply to only about 4% of taxpayers with any small business income (Rubin, CQ Today, 7/15).

Rep. Jared Polis (D-Colo.) recently circulated a draft letter among freshman Democrats to House Speaker Nancy Pelosi (D-Calif.) opposing the tax because of its potential effect on small businesses.

In addition, some House members are concerned that an extended debate over the surtaxes would be futile because the surtaxes might not survive a reconciliation of House and Senate versions of reform legislation (Roll Call, 7/16).

Small-business owners are warning that the economy will suffer if they are required to pay the surtaxes included in the House bill, the Washington Times reports. According to the Washington Times, some small-business owners have said that the surtaxes would force them to limit hiring practices and reduce wages, two areas in which they currently struggle because of the economic recession (Dickson, Washington Times, 7/16).

The National Association of Manufacturers on Wednesday sent a letter to House members criticizing the surtax.

In addition, the National Federation of Independent Business, in a letter to House lawmakers, wrote that the bill "threatens the viability of our nation's job creators, fails to increase access and choice to all small businesses, destroys choice and competition for private insurance and fails to address the core challenge facing small business -- cost" (Murray, Roll Call, 7/15).

Editorial

The House bill "would go a long way toward solving the nation's health insurance problems without driving up the deficit" and is "worth fighting for," a New York Times editorial states. The editorial continues that although the surtaxes have "critics outraged" because they claim "it is unfair to require a small sliver of the population to bear the brunt of the cost," high-income U.S. residents "have benefited greatly from Bush-era tax cuts, and their incomes have risen disproportionately in recent years" (New York Times, 7/16).

Broadcast Coverage

• American Public Media's "Marketplace" on Wednesday included a commentary by Robert Reich, professor of public policy at the University of California-Berkeley, on the surtax. Reich said the surtaxes are "fair" because high-income U.S. residents have benefited from taking home the highest percentage of total income since 1928 (Ryssdal, "Marketplace," American Public Media, 7/15).
• NPR's "All Things Considered" on Wednesday reported on the House bill. The segment includes comments from House Majority Leader Steny Hoyer (D-Md.) ("All Things Considered," NPR, 7/15).