AHLSTARZ Tax and Accounting Service -- Numbers, Simplified.

House lawmakers made good on their promise to pass a sweeping overhaul of the nation's health insurance system, approving the Affordable Health Care for America Act (HR 3962) by a vote of 220 to 215. The historical vote came late on November 8, after lawmakers from both parties spent the day debating the merits of the legislation, including whether funding for abortion should be paid for by federal dollars.

Democratic lawmakers said the measure, which will provide insurance for 96 percent of Americans, is the single most important step in 100 years to address the health care needs of American families. "This bill will at long last reform the health care system by expanding choices, reducing costs, and providing people with peace of mind about their health insurance," said Rep. Henry Waxman, D-Calif., who chairs the House Energy and Commerce Committee. The bill was a merger of work produced by his committee and the House Ways and Means and House Education and Labor committees.

GOP lawmakers characterized the legislation as a job-killing, big government takeover of the health care system that would disrupt the free market and interfere with doctor/patient relationships. "Taken in full, this government takeover of health care will increase federal health care spending, pile more debt onto the backs of our children, and hurt our economy with job-killing tax increases," said Rep. Tom Price, R-Ga., chairman of the conservative House Republican Study Committee. "But most disturbingly, it will place Americans' personal medical decisions in the hands of faceless bureaucrats in Washington."

The White House issued a statement of administrative policy on November 6 offering strong support for the legislation, noting that the public option for insurance included in the bill will ensure that Americans benefit from choice and competition in the market. "HR 3962 will provide needed insurance reforms for Americans with insurance, expand coverage for those who do not have insurance, lower costs for families and businesses, and begin to reduce the Nation's deficit," according to the administration statement. The Congressional Budget Office and the Joint Committee on Taxation estimate that the health care bill would cut the federal budget deficit by $109 billion over the 2010 --2019 period. The JCT estimated a net cost of $891 billion over 10 years for the health reform legislation.

To offset that cost, Democrat lawmakers relied on a combination of cuts in Medicare spending and increases in federal taxes. The biggest revenue raisers in the legislation are a 5.4 percent surtax on individuals with adjusted gross income (AGI) in excess of $500,000 and for families, with AGI in excess of $1 million. That provision would raise $460 billion. Another $20 billion would come from a 2.5 percent excise tax on the sale of medical devices, approximately $17 billion would come from changes to information reporting requirements for corporations, $6 billion from repealing worldwide interest allocation rules, and $23 billion from changes to a biofuel tax credit used by paper manufacturers.

Reaction from Senate Republicans was swift and negative. Speaking on "CBS News' Face the Nation "program on November 8, Sen. Lindsey Graham, R-S.C., said "the House bill is dead on arrival in the Senate. Just look at how it passed." He noted that 39 Democrats from swing states voted against the bill, which only received two more than the 218 needed for passage. "It was a bill written by liberals for liberals. And people like (Sen.) Joe Lieberman, (I-Conn.), are not going to get anywhere near the House bill," Graham predicted. "It cuts Medicare about $500 billion dollars. It's over a trillion dollars in new spending. It does have the public option. So the House bill is a non-starter in the Senate."

By Stephen K. Cooper, CCH News Staff

JCT Estimated Revenue Effects of the Revenue Provisions Contained in HR 3962, the Affordable Health Care or America Act, as Amended, JCX-48-09

Statement of Administration Policy on HR 3962 --Affordable Health Care for America Act

CBO Estimate of HR 3962, the Affordable Health Care for America Act