House Committee Approves Obama's Healthcare Reform Bill Backed By AMA

July 17, 2009 3:09 p.m. EST

Washington, D.C. (AHN) - The House Ways and Means Committee early Friday passed a $1 trillion healthcare bill that includes a public option plan and a surcharge ranging from 1 to 5.4 percent on the 1.2 percent wealthiest Americans, provisions that Republicans criticize as a "government takeover of healthcare" and a "job-killing tax." Approval came the same day the American Medical Association declared its support for the bill.

By a 23-18 vote, the panel endorsed H.R. 3200, the America's Affordable Health Choices Act of 2009, to the full House floor. The measure was crafted by the Ways Committee along with two other panels, Education and Energy.

It is one of several several efforts by Democrats in Congress to overhaul the nation's healthcare system and extend coverage to the 47 million uninsured, one of the top priorities of the Obama administration in its first year.

Passage comes the same day the American Medical Association declared its support for the bill, and two days after Senate Democrats successfully moved another healthcare proposal costing $600 billion past the Senate Health Committee.

"The status quo is unacceptable," AMA president J. James Rohack said in a statement. "We support passage of H.R. 3200, and we look forward to additional constructive dialogue as the long process of passing a health reform bill continues. This is an important step, but one of many steps in the process."

President Barack Obama, who last month pitched his plan for a public heathcare program and became the first commander-in-chief to speak before the AMA since Ronald Reagan in 1983, said he was "grateful" for the support.

"Along with the nation's nurses, these doctors are joining the chorus of Americans who know that the time to reform what is broken about our health care system is now," he added, referring to an agreement with hospitals across the nation to give $155 billion in Medicare and Medicaid savings over the next decade to help pay for the healthcare overhaul, and another one with drug companies to contribute $80 billion over the next decade.

Under the House bill, the uninsured or those who want a new healthcare plan will have the same choices that members of Congress have, and the option of getting a public insurance plan or another offered by private companies.

About half of the costs of the legislation will be paid for through reforms and savings in Medicare and Medicaid, including eliminating $156 billion in overpayments to private Medicaid Advantage plans over 10 years.

The remainder will be covered by a graduated surcharge on families earning more than $350,000, which make up about 1.2 percent of the wealthiest Americans according to Democrats.

The surcharge "ensures that middle-class Americans will see no tax increases," according to Democrats. It works by taxing 1 percent on those earning between $350,000 and $500,000, 1.5 percent on those with incomes between $500,000 and $1,000,000, and 5.4 percent for those earning more than $1,000,000.

"If the health reforms included in the bill achieve projected cost savings," the surcharge decreases and families making between $350,000 and $1,000,000 will have less than 1 percent tax.

The measure also requires employers to either offer coverage to employees while contributing toward the premiums, or pay a fee to the government equivalent to 8 percent of their workers' payroll.

Small businesses with less than $250,000 in annual payroll are exempted from both requirements.

Obama previously said announced last week while in Italy for a G8 summit that he wants the legislation finished before the August recess. Congress is due to take a month-long break on Aug. 10.

Republicans have continued to warn that Democratic proposals, unveiled when the deficit surpassed the a $1 trillion-mark, were not deficit-neutral. They also cite testimony by Congressional Budget Office Director Douglas Elmendorf on Thursday before the Senate Budget

Committee that the bill passed by the Senate Health Committee may raise and not lower healthcare costs for Americans.

"In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of health spending by a significant amount," Elmendorf testified. "And on the contrary the legislation significantly expands the federal responsibility for health care costs."

"The creation of new subsidies for health insurance, which is a critical part of expanding health insurance coverage in our judgment, would by itself increase the federal responsibility for health care. That raises federal spending on health care, it raises the amount of activity that is growing at this unsustainable rate," he added.

Elmendorf said in a previous report on that the bill passed by the House Ways Committee would "establish a mandate for most legal residents to obtain insurance, significantly expand eligibility for Medicaid, and set up insurance 'exchanges' through which certain individuals and families could receive federal subsidies to substantially reduce the cost of purchasing that coverage."

But he also said the report "does not take into account other parts of the proposal that would raise taxes or reduce other spending (particularly in the Medicare program) in an effort to offset the federal costs of implementing those coverage specifications."

Rep. Geoff Davis (R-KY), one of the 18 lawmakers of the Ways Committee who voted against the bill, accused Democrats of rushing the measure in a markup that began less than 24 hours from passage.

"In order to enact successful health care reform, we must first accomplish three things: reform and re-engineer Medicare and Medicaid, reform the private market insurance system and enact tort reform to end frivolous lawsuits. Without all three, we fail in our shared goal," Davis said before the vote.