Filed Under:Health Insurance, Individual Health

Boehner Pushes Device Tax-Health Account Package

House Speaker John Boehner (AP Photo/Evan Vucci)
House Speaker John Boehner (AP Photo/Evan Vucci)

House Speaker John Boehner is clashing with the Obama administration over H.R. 436, a package that now includes the bill that would eliminate the flexible spending accont (FSA) "use it or lose it" rule.

The best-known section of the new H.R. 436, the Health Care Cost Reduction Act bill, would eliminate a 2.3% excise tax on medical devices that's set to be imposed by the Patient Protection and Affordable Care Act of 2010 (PPACA).

A staffer on Boehner's team has posted a blog entry with the headline, "House GOP Leading on Jobs with Vote on Health Care Cost Reduction Act." Boehner's staffers also have been posting many tweets supporting the package on Boehner's official Twitter feed. Other top Republicans also have been promoting the package through their traditional media and social media operations. Some Democrats have expressed support for some H.R. 436 provisions, such as the idea of repealing the medical device tax.

Now the White House says President Obama's senior advisors will recommend that he veto H.R. 436 if the bill reaches his desk.

PPACA is helping to improve individuals' health, give American families and small business owners more control of their health care, and "ending the worst practices of insurance companies," administration officials say in a policy statement.

Expanding access to help health care should help increase the medical device makers' revenue, and the excise tax would simply cause them to use a portion of their new, PPACA-related revenue to support the health care system, officials say.

Although H.R. 436 came to life as a medical device excise tax repeal bill, Republican leaders have bundled that bill together with several bills of keen interest to players in the benefits community: H.R. 1004, a bill that could eliminate the requirement that an FSA holder forfeit any unused account balance at the end of the plan year; H.R. 5858, a bill that could change health savings account (HSA) tax rules; and H.R. 5842, a bill that could repeal a PPACA provision that prohibits holders of FSAs and HSAs from using account assets to pay for over-the-counter (OTC) drugs unless the drugs are prescribed by a doctor.

Drafters also have included a section that would change the way the Internal Revenue Service (IRS) handles an individual health insurance purchase tax credit created by PPACA.

Under current PPACA tax credit rules, taxpayers would estimate how much they are likely to earn in the coming year. The IRS would give them tax-credit credit cash in advance, so that they could use the money to buy health coverage. Some taxpayers could get too much cash.

Current law would require taxpayers to pay some of the extra cash back to the government. The current rules would limit how much low-income and moderate-income taxpayers would have to pay back.

The new version of H.R. 436 would require all recipients of the tax credit to pay back all excess credit money received.

Originally, analysts at the Joint Committee on Taxation (JCT) had estimated that the medical device tax repeal and the health account bills could increase the federal budget deficit by $41 billion over 10 years. Adding the tax credit rule change to that collection of proposals could lead the combined package to improve the deficit by $6.7 billion over 10 years, the analysts say.

Obama administration officials say changing the PPACA credit repayment rules would hurt low-income and middle-income families that had done their best to follow the program rules.

"This legislation would also increase the number of uninsured Americans," administration officials say. "In sum, H.R. 436 would fund tax breaks for industry by raising taxes on middle-class and low-income  families. Instead of working together to reduce health care costs, H.R. 436 chooses to refight old  political battles over health care."

In related news, the House Rules Committee met today to set the guidelines that will govern how representatives will debate H.R. 436 when it reaches the House Floor.

The rule adopted allows for 90 minutes of debate on H.R. 436 on the House floor, with the time to be equally divided between the Republicans and the Democrats. The rule waives all points of order against consideration of the bill but will allow opponents to offer one motion to send the bill back to committee.

Rep. Jim McGovern, D-Mass., said Rules Committee leaders should allow lawmakers to amend the bill on the House floor, because they had cobbled unrelated bills together quickly, without allowing time time for committee consideration of the package as a package. He then offered an amendment relating to oil to make the point that he believes House Republican leaders have let Republicans add many unrelated amendments to bills in recent months without providing comparable treatment for Democrats.

Republicans on the committee quickly voted to reject McGovern's call for an open rule and the McGovern oil amendment.

House Majority Leader Eric Cantor, R-Va., said before the White House issued the policy statement that H.R. 436 could come up for a vote on the House floor Friday. 

Several Democratic senators have sponsored or cosponsored the Senate versions of the bills now included in the new H.R. 436 package.

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