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NAW News

Health Care Reform

- June 2011

 With the enactment of the Patient Protection and Affordable Care Act (“PPACA”) and the Healthcare and Education Reconciliation Act in the spring of 2010 (together the “Affordable Care Act” or “ACA”), the attention of stakeholders has necessarily turned to the regulatory process by which “ObamaCare” is being implemented, although the legislative process has remained active as well.

First, following through on the Republican promise made during the 2010 election campaign to attempt to repeal the ACA, the House of Representatives, featuring a newly-elected GOP majority, passed legislation to fully repeal ObamaCare by a 245-189 vote. Companion legislation was then offered in the U.S. Senate by the Republican Leader, Sen. Mitch McConnell (R-KY). The McConnell Amendment, needing 60 votes for passage, was defeated 47 – 51.

A second area of particular interest is Section 9006 of PPACA substantially expanding the IRS Form 1099 reporting requirement imposed on businesses, to cover virtually all business-to-business transactions of $600 or more, beginning in 2012. 1099 reporting has nothing to do with health care, but was added to the $1 trillion bill as a $17 billion “pay-for”. This issue has generated considerable opposition from the business community generally, and the legislative effort to secure its repeal spanned several months beginning last fall. Repeal was finally achieved on April 14th when the President signed H.R. 4, “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011” into law.

NAW is simultaneously engaged in two efforts to repeal particular provisions of the Affordable Care Act; the “free-rider” employer mandate and the “hidden” health insurance tax (HIT). The former penalizes employers of 50 or more employees which fail to provide “affordable” health coverage to their full-time employees. The latter imposes a fee on insurance companies based on their “net premiums” and market share. The HIT is designed to raise $87 billion in its first 10 years of existence and $208 billion in the following decade. The Congressional Budget Office (CBO) confirms that these costs will be “passed through to consumers in the form of higher premiums for private coverage.”

Sen. Orrin Hatch (R-UT) and Rep. Charles Boustany (R-LA-7) have introduced legislation to repeal the employer mandate (S. 20/H.R. 1744, “American Job Protection Act”). S. 20 is pending in the Senate Finance Committee (where Sen. Hatch is the senior GOP member), and H.R. 1744 is pending in the House Ways and Means Committee (on which Rep. Boustany serves). NAW is working with our allies in the Small Business Coalition for Affordable Health Care in an aggressive effort to build support on the Hill for S. 20/H.R. 1744.

Rep. Boustany has also introduced legislation to repeal the HIT (H.R. 1370). NAW is working with our allies in the STOP THE HIT Coalition in support of this bill.

Both of these issues are addressed in a broader NAW-supported package of health reforms introduced by Sen. Jon Kyl (R-AZ), the Senate GOP Whip (S. 1370). This legislation also repeals and replaces the catastrophic plan section; repeals the prohibition on the use of HSA funds for over-the-counter medications; repeals the $2,500 Flexible Spending Accounts savings cap; and strikes the grandfathering regulations now in place.

One final issue bears mention at this point because it involves all three branches of the federal government, and that is the status of PPACA’s individual mandate which goes into effect in 2014. This provision, under which most people are required to have a government-designated level of health coverage or pay a penalty – is the subject of constitutional litigation before the federal courts. At issue in these cases is whether the Commerce Clause of the U.S. Constitution empowers the Congress to require citizens to purchase a commercial product as part of a regulatory scheme affecting an interstate economic market. To date, three Federal District Courts in the District of Columbia, Michigan and Virginia have upheld the requirement and two; the U.S. District Court for the Eastern District of Virginia and U.S. District Court for the Northern District of Florida, have stuck it down. Critically, the federal court in Florida ruled that the individual mandate is not severable from the rest of the ACA thus striking down the entire statute. The Florida case (Florida et al v. U.S. Department of Health and Human Services) is now pending in the U.S. Court of Appeals for the 11th Circuit (Atlanta), while the “competing” Virginia cases (Virginia v. Sebelius (U.S. District Court for the Eastern District of Virginia) and Liberty University v. Geithner (U.S. District Court for the Western District of Virginia) are on appeal to the U.S. Court of Appeals for the Fourth Circuit (Richmond).

As the pending litigation winds its way through the federal courts to the U.S. Supreme Court where it will likely be resolved, the future of the ACA is at best uncertain. Consequently, Sen. Kay Bailey Hutchison (R-TX) has offered an amendment to various bills to impose a moratorium on implementation of the ACA until the pending litigation is complete.