Health Care Reform:

House Passes Senate Bill and Reconciliation Bill

In a rare Sunday session on March 21, 2010, the United States House of Representatives held two historic votes on health care reform. On a vote of 219 to 212, the House voted in favor of the bill passed by the United States Senate on December 24, 2009. All Republicans and 34 Democrats voted against the Senate bill. Shortly after this vote, the House passed a reconciliation bill to make certain changes to the original Senate bill. The vote was 220 to 211. Again, all Republicans and 33 Democrats voted against the reconciliation bill.

The original Senate bill will now go to President Obama for his signature, upon which it will then become law. The reconciliation bill must go to the Senate to be approved. House members expressed concerns that after passage of the Senate bill in the House, the Senate would fail to pass the "fixes" to the Senate bill resulting in several provisions becoming law that are unacceptable to many House members. In an effort to address these concerns, Senate Majority Leader Harry Reid sent a letter to House Speaker Nancy Pelosi committing that Senate Democrats will vote in favor of the reconciliation bill in the Senate, which only requires 51 votes to pass. With two independents, the Senate Democratic caucus has 59 votes.

Senate Republicans have made it clear that they intend to fight the reconciliation bill and use every procedural tactic available to them to derail it. One such tactic is use of the Byrd Rule, authored by long-time Democratic Senator, Robert Byrd, of West Virginia. Under the Byrd Rule, any Senator can object to any part of a reconciliation bill that does not involve a budgetary matter. The Senate parliamentarian, a non-partisan, unelected Senate staff person, will then determine whether the matter should be removed from the bill. Sixty Senators would need to vote to overturn the parliamentarian's decision.

If any changes are made to the reconciliation bill in the Senate, then the revised bill would need to be sent back to the House for approval. It is important to note, however, that the original Senate bill will have already passed and been enacted so any delay in passage of the reconciliation bill will not prevent the passage of health care reform.

The reconciliation bill makes several changes to the original Senate bill, including the following:

1. Increases the cost of the bill from $871 billion in the first 10 years to $940 billion. The Congressional Budget Office's preliminary estimates are that the revised bill would reduce the federal deficit by $138 billion in the first 10 years and by over $1 trillion in the next 10 years.

2. Revises the "Cadillac" tax on high cost insurance plans to delay implementation to 2018 and to apply only to portions of plans costing more than $10,200 a year for individuals and $27,500 for families.

3. Increases Medicaid payments to primary care physicians to bring them in line with Medicare rates.

4. Increases taxes for certain "high income" individuals and families. The Senate bill already includes a 0.9 percent increase to the Medicare payroll tax on earned income above $200,000 for individuals or $250,000 for couples. The reconciliation bill creates a new tax starting in 2013 for those same individuals and couples of 3.8 percent on investment income, such as interest, capital gains and dividends.

5. The reconciliation bill deletes the so-called "Cornhusker kickback," and it increases federal funding for all states to help cover the cost of the expansion of Medicaid.

There will certainly continue to be challenges to aspects of the legislation, including efforts on the part of various states to challenge the bill. Idaho has already enacted a law directing the Idaho Attorney General to file litigation challenging the individual mandate should it be passed by the federal government. Thirty-seven other states are considering similar legislation. In addition, many provisions will not be fully implemented for years. However, once President Obama signs the Senate bill, the most extensive reforms of health care since the passage of Medicare and Medicaid will be a reality.

Ice Miller attorneys have reviewed the legislation in detail, and we are advising our clients on its impact on various groups, including employers and benefit plans, health care providers, tax payers, drug and device manufacturers, insurers and other clients interested in pursuing the many grants and other business opportunities created by the legislation. Look for summaries of key provisions and other information in the near future. In the meantime, please feel free to contact Greg Pemberton or Kevin Woodhouse

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.