I decided to spice things up a bit here with the addition of “The Reckoning”. I will leave it up to you to see if this constitutes a tongue-in-cheek reference to 80’s sequels, or the reality of this bill. 
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Here are my observations from pages 143 to page 204 of HR 3200:
SEC. 301. INDIVIDUAL RESPONSIBILITY.
For an individual’s responsibility to obtain acceptable coverage, see section 59B of the Internal Revenue Code of 1986 (as added by section 401 of this Act).
MY NOTE: What you see above is the entirety of Section 301, which may be the shortest in the entire bill. As you can see this refers to a new tax that is created on those who don’t have “acceptable” coverage. If the goal of this bill as stated in its primary title is “affordable health choices”, doesn’t it seem counterintuitive to tax those who don’t have coverage?
I sincerely thought that the goal here was to widen the options available, including a public health option. Instead, this bill seeks to punish (tax) those who don’t have acceptable plans. Why? I am certain that the newly appointed Health Commissioner would be the person in charge of determining what constitutes acceptable coverage. I don’t like the idea of the government telling me if my insurance plan is acceptable or not.
Section 401 needs to be addressed out of order, since that’s the one that creates a new section within the tax code. Here is the portion referenced there if you can figure it out: http://www4.law.cornell.edu/uscode/html/uscode26/usc_sec_26_00006012—-000-.html - I am not a CPA, but it looks like you will be paying a 2.5% tax on the vast majority of your income if you don’t have coverage. So, for anyone who is currently saving money by going without any health insurance, your costs WILL increase under this plan.
You must either pay a premium, or pay a newly-created tax. Period.
SEC. 312. EMPLOYER RESPONSIBILITY TO CONTRIBUTE TOWARDS EMPLOYEE AND DEPENDENT COVERAGE. (a)(3) MINIMUM EMPLOYER CONTRIBUTION FOR EMPLOYEES OTHER THAN FULL-TIME EMPLOYEES In the case of coverage for an employee who is not a full-time employee, the amount of the minimum employer contribution under this subsection shall be a proportion (as determined in accordance with rules of the Health Choices Commissioner, the Secretary of Labor, the Secretary of Health and Human Services, and the Secretary of the Treasury, as applicable) of the minimum employer contribution under this subsection with respect to a full-time employee that reflects the proportion of–
(A) the average weekly hours of employment of the employee by the employer, to
(B) the minimum weekly hours specified by the Commissioner for an employee to be a full-time employee.
MY NOTE: This comes back to what I said in a previous post about the Commissioner’s level of authority in defining the term “full-time employee”. Is this the type of thing that needs to be left up in the air? If the Commissioner determines that “full-time” is now 20 hours (or 60), that would dramatically affect the cost to employers.
SEC. 313. EMPLOYER CONTRIBUTIONS IN LIEU OF COVERAGE.
MY NOTE: This section allows employers to pay 8% of an employee’s wages instead of covering them under a plan. Small employers (defined as employers with total payroll of under $400,000) can pay less. If the total payroll is under $250,000, employers are not required to pay anything at all on behalf of their employees with regard to health coverage.
My reading indicates that all employers must provide coverage, or pay an excise tax. I tried to research this, and I don’t think that this is a current requirement.
SEC. 401. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE COVERAGE.
`(a) Tax Imposed- In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax equal to 2.5 percent of the excess of–
`(1) the taxpayer’s modified adjusted gross income for the taxable year, over
`(2) the amount of gross income specified in section 6012(a)(1) with respect to the taxpayer.
MY NOTE: I read the entirety of Section 401 multiple times and very carefully. Basically, if you are not paying a premium, then you will be taxed for an amount not to exceed the national average premium for “self-only” coverage. The assumption here is that the government wants everyone to pay for acceptable coverage. Considering that the alternative is to pay taxes, it would seem like this bill makes it pretty much compulsory.
(5) RELIGIOUS CONSCIENCE EXEMPTION-
`(A) IN GENERAL- Subsection (a) shall not apply to any individual (and any qualifying child residing with such individual) for any period if such individual has in effect an exemption which certifies that such individual is a member of a recognized religious sect or division thereof described in section 1402(g)(1) and an adherent of established tenets or teachings of such sect or division as described in such section.
`(B) EXEMPTION- An application for the exemption described in subparagraph (A) shall be filed with the Secretary at such time and in such form and manner as the Secretary may prescribe. Any such exemption granted by the Secretary shall be effective for such period as the Secretary determines appropriate.
MY NOTE: Who knew? Apparently, under the current tax code, members of certain religious sects can avoid paying taxes for Social Security because their faith doesn’t allow them to collect benefits under those types of programs. The tax code doesn’t name these specifically, but before you decide to start your own religion, it does specify that the sect must have been in existence “at all times since December 31, 1950″. I had no idea!
SEC. 412. RESPONSIBILITIES OF NONELECTING EMPLOYERS.
`(1) IN GENERAL- In addition to other taxes, there is hereby imposed on every nonelecting employer an excise tax, with respect to having individuals in his employ, equal to 8 percent of the wages
MY NOTE: This is a tax created on large employers only, since employers with payrolls under $400,000 don’t have to pay as much (if under $250K, nothing at all). I’m not sure how I feel about this part – I can see the reason behind it, but I’m not sure if taxing companies that decide not to provide coverage is the way to go. I welcome your commentary on this.
SEC. 441. SURCHARGE ON HIGH INCOME INDIVIDUALS.
`(a) General Rule- In the case of a taxpayer other than a corporation, there is hereby imposed (in addition to any other tax imposed by this subtitle) a tax equal to–
`(1) 1 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $350,000 but does not exceed $500,000,
`(2) 1.5 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $500,000 but does not exceed $1,000,000, and
`(3) 5.4 percent of so much of the modified adjusted gross income of the taxpayer as exceeds $1,000,000.
MY NOTES: This entire section is kind of a bombshell. After this part, it states that the percentages in (1) and (2) above are going to be 2% and 3% respectively, unless the EXCESS FEDERAL HEALTH REFORM SAVINGS is over $150,000,000,000 (yes, that’s billions). The “excess” here is anything over $525,000,000,000. Health reform savings is defined as “the aggregate reductions in Federal expenditures which have been achieved as a result of the provisions of, and amendments made by, division B of the America’s Affordable Health Choices Act of 2009″. If the savings reaches $700 billion, they will not tax the first two groups listed above.
Let me get this straight – you won’t tax rich people IF you manage to save three-quarters of a TRILLION DOLLARS from this program?!? This is the ultimate empty gesture, in my humble opinion. I think it seems even more ludicrous to include this provision, since it seems as though no one has any intention of doing away with this tax at any point. If you make over $1 million, you will pay at least $54,000 for this one tax. I know that most people are probably thinking, “Cry me a river”, but is this equitable?
This reminds me of toll roads and other local taxing entities that are put in place “until the bond is paid off”, but somehow new bonds are always necessary. Does anyone really expect the bookkeeping to reflect a surplus/savings at this level?
SUMMARY: Under these two titles both Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code are modified. New taxes are created in many ways.
If you have actually read all four of these posts, I applaud you, because I think you are ahead of most people, including many of our elected representatives.
TYPOS/MISTAKES
Sec. 312. (c)(1) Should read “such” not “suchs”
Sec. 324 (a)(2) is an incomplete thought. It appears to be missing the words “there is a” in front of the word “coordination”. Otherwise, this is not a complete sentence.
SEC. 806. REGULATIONS. There is no part (a) – starts with part (b).
eva meier on 09.09.2009
Geez, you must have a lot of spare time on your hands!! I’ll try to read through this when my bed isn’t calling to me…
Kevin Blouin on 09.10.2009
As per my previous post, stop reading my two cents worth now, and come back to it when you’re done with the heavy brain lifting this bill requires.
Now, for future reading:
Currently, there are no requirements of medical health benefits for companies of any size (at least not at the federal level). Most state require businesses with x number of full-time employees (full-time begin defined by the state) provide their employees with certain benefits and coverage. That’s why there was a serious sharking in the California tech industry with forcing “employees” to be switched to contract workers with “long-term” contracts. This eliminated the state requirements for the big tech firms to provide medical and retirement, and as a bonus, even social security (the FICA) stuff that you, as an independent operator, are well familiar with.
During the primary debates, when Clinton and Obama were comparing their plans, Clinton’s had a complete mandate on 100% enrollment in a socialist medical system, like medicare/medicaid on steriods. Obama’s plan was to provide an affordable opt-in. Fortunately or unfortnately, depending on your viewpoint, Obama won, but left this bill completely in the hands of Congress. They’ve kept the “opt-in” but pretty much make it a criminal act to not be covered to an “acceptable” level. While the general gist of this is actually reasonable — after all, if everyone else is being responsible and paying for coverage, you choose not to and you get sick and require medical care, who pays then? It’s actually an improvement over now, where you’d lose every asset you have and then the government, whether local, state, and/or federal still has to eat the costs.
So, while it may seem a little “vindictive,” it’s actually just stating that, “Look, you’re going to pay because you are human and humans come with a limited warranty. Eventually we’re gonna have to cover your butt, so we’re gonna make sure that you’re the one actually paying your way whether you like it or not. If you don’t like it, then feel free to go live, get sick and die on someone else’s dime in some other country.”
Taxation on businesses. While $400,000 may seem like a lot, it’s really not that big a payroll. Most Texas businesses that fall under the small business (less than 15 employees) would fall into this category. Which under current laws don’t have to cover anything really. The $250,000 limit is for the true Mom and Pop shop and independent businesses, like yours. Above that, they’re saying that you pretty much have to pay in.
I actually rather like the payroll amount portions of this rather than setting the tiers based on number of employees. This would at least balance things out between businesses with 15-20 low wage employees (like the neighborhood restaurant) and those with only 3-4 high wage employees (like the Mortgage brokerage)
Taxation increases are the only way any new plan can be paid without increasing defecits, though I wonder if this is all pie in the sky numbering, or if they have had a real cost analysis done to come up with these numbers and percentages. The other drawback is whether or not this is a comprehensive tax on all companies with American employees, regardless of whether or not they have other payroll taxes, or if this is just another tax that large offshore corporations can skip paying and leave the local businesses covering the entire cost.
Keep it up! You’re raising this to an actual debate rather than just a shouting match.
admin on 09.11.2009
Kevin – I really appreciate the fact that you took time to leave a couple of well-reasoned comments.
With regard to the payroll thing, I am not positive if we would even qualify for a break there. Is this only for employees, or for anyone (1099 contractors, etc.)? If it includes me and my business partners, we would be paying 8% just like the “big guys”. If it’s only for employee payroll, we have none.
I don’t have a problem with requiring some minimal level of coverage – it seems like a sane approach to me. I have had clients and friends who went bankrupt because of one major illness when they had no coverage at all.
I saw a statistic tonight indicating that only about 50% of Texas businesses provide insurance for their employees right now – this is a lot lower than I would have imagined. The article also stated that health insurance premiums for employers have increased at roughly four times the rate of inflation for the past decade. Clearly, something has to change, since costs continue to spiral out of control.
Kevin Blouin on 09.12.2009
I do know that my company had to switch to quarterly profit-sharing instead of raises 5 years ago because they provided excellent insurance, but the premiums had more than doubled in only 3 years at that time. Now, our profit margins keep slimming, even before the current strife, because premiums still continue to rise. I keep hearing arguments about how this bill is out to hurt insurance companies and eliminate their profits, but what about ALL the other companies whose profits are dipping into the red just to provide decent coverage for their employees? And one of our employees has been blocked from coverage because he has been diabetic all his life.
I still think there are many more issues to be worked out, but I’ve been digging through this bill (ponderously) because of you. I’ll probably stay about 50 pages behind you, and your notes help me face the blah blah blah a lot. Thanks and keep it up! I’m pretty sure Andy and I will get your name on a ballot in the near future. I’d like to vote for a good representative of Texas upon my return.
admin on 09.12.2009
Kevin – After realizing how many companies have eliminated coverage for their employees as a result of huge cost increases, I agree that I don’t care a whole lot about whether insurance companies are highly profitable or not. I do wonder how lower insurance company profitability would affect other sectors, such as the stock market. Just a curiosity.
As for being on the ballot, I have had a lot of people mentioning that to me lately, but I probably can’t suppress my real beliefs enough to be a politician.
Andrew on 09.25.2009
> saw a statistic tonight indicating that only about 50% of Texas businesses provide insurance for their employees right now
That could very easily be a skewed statistic. All that could mean is that for every IBM or Dell who employs and insures 20K+, there is some tiny storefront with a minimum wage helper that it not getting coverage. What percentage of people employed by Texas businesses are not insured by their employer?
However, it does tell you the potential impact of making the little guy pay, and how many new people would be affected.
admin on 09.25.2009
Andrew – That is a terrific question, and you just illustrating something which could be an example of what my wife likes to call “how to lie with statistics”. I don’t know the percentage of uninsured Texas workers offhand, but I would like to research this and figure it out.
Zoran on 09.26.2009
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Kylie Batt on 04.21.2010
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Here are my observations from pages 143 to page 204 of HR 3200:
SEC. […….