It's Here: Democrats Pass
Sweeping Health-Care Reform

By Tom Granahan | Fox Business | March 21, 2010

Ushering in the most dramatic — and potentially most expensive — legislation in generations, Democrats in the House of Representatives on Sunday night pushed through a health-care reform bill, one that will mandate, among other things, that all Americans have health insurance.

The vote, which came on the heels of a cantankerous process to sway members of the Democratic Party to support the sweeping legislation, was wrapped up at about 10:45 p.m. ET. In the hours leading up to the hotly anticipated vote it became clear that President Obama and House Speaker Nancy Pelosi had secured the necessary 216 votes needed to enact health-care reform, which has been the subject of more than a year-long debate and has mobilized both supporters and non supporters like few other pieces of proposed legislation.

As part of an agreement with anti-abortion Democrats, led by Rep. Bart Stupak (D., Mich), the President has agreed to an executive order intended to assure pro-life Democrats that federal money won't be used to fund abortions under the newly enacted health-care legislation.

Despite the bitter debate, the biggest impact of the bill on average Americans, at least in terms of actual health care, won’t be felt for years, though incremental changes could be seen in a matter of months. However, the same cannot be necessarily said for the business community.

On Friday, for instance, Caterpillar (CAT: 59.38, 0, 0%) said the new requirements would cost the company $100 million in the first year of its enactment.

"We are disappointed that efforts at reform have not addressed the cost concerns we've raised throughout the year," wrote Gregory Folley, vice president and chief human resources officer of Caterpillar, in a letter addressed to Pelosi and House Republican Leader John Boehner (R., Ohio). In Caterpillar’s case, the company says the added costs would come mainly from a new tax on federal subsidies Caterpillar receives for the prescription-drug benefits if offers retired employees. Also, the new law requires companies extend coverage for workers’ dependent children up to the age of 26.

Meanwhile, the Chamber of Commerce has been vocal in its opposition to the reform, calling both the Senate-passed version of H.R. 3590, dubbed the Patient Protection and Affordable Care Act, and the related budget reconciliation legislation, H.R. 4872, the Student Aid and Fiscal Responsibility Act of 2009, "fundamentally flawed as the underlying framework they would establish is the wrong approach to health reform."

The Chamber says the new law will hurt job creation and increase taxes on small businesses, and do little to restrain costs. The bill would also impose a new, 3.8% "Medicare tax" on non-wage income that would target high-income earners, income from interest, dividends and capital gains.

How the new health-care requirements will be financed, of course, is at the heart of the debate. The Congressional Budget Office said the cost of the insurance coverage of the bill will come in at $940 billion, while the federal deficit will be cut by $138 billion over 10 years. Needless to say, there was widespread skepticism of those estimates.

On Friday, Rep. Paul Ryan (R, Wisc.) called into question the accuracy of the CBO numbers, and produced a letter from the agency which he said shows that, "if you take out the phony budget gimmicks," leads to large deficits.

"When you take the double counting out, this thing is a fiscal train wreck," he said on FOX Business, referring to what some opponents see as a fudging of numbers relating to Medicare funding.

The legislation would require substantial insurance market reforms that would bar insurers from excluding people for pre-existing conditions and prevent them from arbitrarily dropping policy holders.

Among the changes that the new legislation will bring include fines of up to 2,5% of income for individuals who do not obtain health insurance. The bill also mandates that insurers spend at least 85 cents of every premium dollar on medical care in small group markets, and 80 cents in large group markets.

One of the more controversial requirements is that businesses with fewer than 50 workers who don't offer medical coverage could be fined $2,000 per full-time employee. But some small business owners have said they may well find it more cost effective to pay the fines than to cover the cost of insurance to their employees, who would then turn to government-backed insurance programs.

"In this economy ... with this unemployment ... with our desperate need for jobs and economic growth ... is this really the time to raise taxes, create bureaucracies, and burden every job creator in our land?" asked Boehner in a spirited speech prior the vote on the Senate bill. "You know the answer is no."