INDEPENDENCE, OHIO-The Precision Metalforming Association (PMA) and the National Tooling and Machining Association (NTMA) are involved in the health care debate and have been meeting with senators and representatives from both parties to urge members of Congress that any efforts to reform health care must not increase the cost of manufacturing in America through new taxes and mandates on small businesses. One Voice, the combined lobbying effort of the two organizations, is working directly with policymakers and coordinating efforts with a number of coalitions ranging from small business to manufacturing.
One Voice has provided the following status of the three major congressional bills addressing this issue and an overview of select content of these bills. Status of the Three Major Congressional Health Care Reform Bills
The House bill, titled “America’s Affordable Health Choices Act of 2009” (H.R. 3200), is referred to as the “House Tri-Comm Bill” because there are three House Committees drafting the bill. The last of the three committees passed their bill 31-28 on July 31. The full House is targeting September 15 for consideration of their version of the bill.
Blue Dog Democrats (54 fiscally conservative Democrats) are pushing back against an increase in costs and mandates. Conservative and freshmen democrats hold much of the cards, totaling more than 70 members out of 238 in the House Democratic Caucus.
In the Senate, two committees are drafting two separate bills. The Health, Education, Labor and Pensions (HELP) Committee has outlined its proposal and passed a bill from the committee. In the Finance Committee, three panel democrats and three panel republicans are negotiating the bill. After Finance Committee members reconcile their differences, they must then formulate one senate bill with the HELP Committee-there are many differences in the bill that must be worked out before mid-September. Select Tentative Content of Bills
(proposals have changed almost daily during the past two months and will continue to change during the coming weeks) Employer and Individual Mandates
All three plans have an individual mandate, often requiring individuals to prove that they have health care insurance; bills will provide subsidies to those who are up to roughly 400% of the Federal Poverty Level (FPL, roughly $14,400/individual).
Individual penalty is 2.5% income tax if not insured.
The house and senate HELP bills include employer mandates. The Senate Finance bill is unclear but, as of now, there is no employer mandate.
“Pay or Play”: Some proposals will require the employer to offer a basic coverage plan similar to one offered federal employees in 2007.
House Bill: Companies that do not provide similar coverage and contribute a set amount (at least 65% for family; 72.5% for individuals) would pay an 8% payroll tax, which will go towards the Health Insurance Exchange Trust Fund (speculation is the 8% tax will likely increase). The legislation exempts firms with up to $500,000 annual payroll.
Senate HELP: Employers must cover at least 60% of the monthly premium of a qualified plan or pay $750/worker per year “equity assessment” or $375 per part-time workers. It exempts firms with less than 25 employees in addition to other revenue increases.
Senate HELP also provides credits to companies with fewer than 50 employees that provide at least 60% coverage and whose average salary is less than $50,000 - $1,000 per single employee covered; $2,000 small business credit for family credit.
The Senate Finance bill reportedly will not include an employer mandate or public option, but would feature a co-op option, requiring employers with more than 50 employees to offset the costs for eligible employees in the co-op program. Under the co-op plan, employers would contribute 50% of costs for workers enrolled in this federal program based on a national average.
Paying for it All
The likely target for health care reform is to keep an overall package price tag below $1 trillion during the next 10 years. Removing the health care tax exemption could raise almost $300 billion during 10 years; that is an increase of 3.7% for someone in the middle income tax bracket. If you’re over 35%, removing the exemption will cost you roughly $3,500/year and your employees about $1,500/year. (Unions oppose removing the exemption because many negotiated health care benefits in lieu of salary in their contracts.)
The senate is considering an excise tax on insurance companies that offer “premium Cadillac” plans, costing $21,000 or more per year for family coverage.
Income surtax-possibly as high as 4%. One percent surtax on modified adjusted gross income (income after deductions) between $350,000 and $500,000; a 1.5% surtax between $500,000 and $1,000,000; and a 5.4% surtax on income that exceeds $1,000,000. If substantial savings are not realized within three years, the tax rates for the $350,000 and $500,000 brackets would double to 2 and 3% respectively. Nearly 70% of manufacturers file as S-corporations, partnerships or other pass-through entities that pay taxes at the individual rate. Due to significant opposition from groups, this surtax may be off the table.
Initially, all proposals included some form of a government-sponsored public option to compete with private sector plans. Because of significant pushback and concerns over whether a government plan could compete fairly against private coverage, support for a public option is rapidly dwindling. Another concern is that employers will pay the 8% payroll tax and dump employees into an overwhelmed public plan, which some fear will lead to universal government coverage.
Proposals are beginning to surface that will require purchase of base coverage but also offer the ability to purchase premium coverage in addition to the basic levels mandated.
The use of Health Savings Accounts and Flexible Spending Accounts may be permitted but cannot count toward the qualified coverage threshold.
A base plan will likely cover at least the following:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance abuse services
- Prescription drugs
- Rehabilitative and laboratory services
- Preventive and wellness services
- Pediatric services, including oral and vision care
As Congress continues to craft health care reform legislation, it is important that manufacturers be heard. To send a message to your members of Congress through the NTMA/PMA One Voice Web site, click here.