The Top Five Branches Of Health Law GOP Wants To Prune

January 24, 2011

Lexie Verdon, Bara Vaida and Jordan Rau

The Republican effort to repeal the health care law is going nowhere in the Democratic-controlled Senate, but that doesn't mean that the GOP is backing down. House Republicans are already beginning work in committees to lop off and possibly replace some of the law's individual provisions.

Party leaders have released few specifics, but some of the changes that have been urged by Republicans and a few Democrats could affect Americans' health care spending and coverage under the law.

Ways and Means Committee Chairman Dave Camp of Michigan was blunt about the strategy when addressing reporters last week: "If the tree is rotten, you cut it down." If that doesn't work, "we'll prune it branch by branch."

Here is a quick look at five "branches" of the health law "tree" Republicans are eyeing.

1. Reporting Business Payments on 1099 Forms

What the law says: Businesses that make payments of $600 in a year for goods or services to a single provider must file a 1099 form to the Internal Revenue Service identifying the company or person receiving the payment.

Purpose: The reporting requirement is expected to raise $19 billion over 10 years to help pay for the cost of expanded insurance coverage under the health law. It is intended to help increase taxpayers' compliance with income reporting rules.

Where it stands: This provision quickly raised concerns from business groups, which argue that the $600 trigger is too low and will create an administrative nightmare, especially for small businesses. That prompted bipartisan support to change or repeal the provision; the White House agreed that it should be amended.

Both Republican and Democratic lawmakers have offered proposals, but none passed last year. The new GOP majority in the House is determined to take up the issue again and have made a bill repealing the reporting requirement a priority. Three Democratic senators have written Speaker John Boehner to urge quick passage of the bill.

2. Individual Mandate

What the law says: U.S. citizens and legal residents are required to have health insurance by 2014 or pay a penalty. A number of people are exempted from the mandate, including those for whom the coverage would cost more than 8 percent of their income, American Indians and those who have religious objections.

Purpose: The mandate is designed to discourage consumers from waiting to apply for coverage until they are sick and need costly treatments. Backers say that's important because insurers will be required to provide coverage to people with pre-existing medical conditions.

The Congressional Budget Office has estimated that if the provision were struck from the law, fewer healthy people would purchase insurance and the result would be a 15 to 20 percent increase in premiums in the individual insurance market. It also predicted that the number of uninsured Americans would rise to 39 million from 23 million by 2019 if the mandate is repealed or overturned by courts.

Where it stands: Republicans argue it is unconstitutional to force individuals to purchase a product and about two dozen states are challenging the provision in court.

The issue is expected to go all the way to the Supreme Court.

Even some Democrats who supported the law, such as Sens. Claire McCaskill of Missouri and Ben Nelson of Nebraska, have backed away. Various groups are promoting alternatives like limiting insurance plan enrollment to specific times or imposing penalties on those who do not enroll when they first become eligible; or replacing the mandate with an incentive to buy health insurance, such as a tax credit.

3. Independent Payment Advisory Board

What's in the law: This 15-member board is tasked with curbing the per capita rate of growth in Medicare spending. The board's recommendations will be automatically implemented in the 2015 fiscal year unless Congress comes up with its own solution.

Congress may also vote, by a supermajority, to reject the recommendations and send the bill to the president, who can sign or veto the measure. Both Congress and the board face statutory deadlines for action.

Purpose: Efforts by Congress to rein in Medicare spending have been met by repeated resistance from special interests, making it politically difficult for lawmakers to slow health care spending. The board is supposed to make the hard decisions on spending that Congress has been unable to implement.

Where it stands: Republicans see the board as another expansion of government over health care, and many House Democrats oppose an independent board exercising control over Medicare. Many powerful interests, including doctors, drug companies, hospitals and patients-rights groups have begun lobbying Congress to get rid of the provision. They say they're worried the cuts will be draconian, disrupting the health care system.

4. Health Care Flexible Spending Accounts

What's in the law: Starting this year, people who put money into pre-tax flexible spending accounts (FSAs) can no longer use those funds to buy over-the-counter medications or health care products without a prescription. Starting in 2013, the maximum contributions to those accounts will be capped at $2,500 a year.

Purpose: The change is intended to help the government pay for the broader health overhaul. Many economists also argue that FSAs encourage consumers to make needless purchases because they fear forfeiting their account balances at the end of the year.

Where it stands: Companies that administer these accounts are pressing Congress to rescind the restriction on over-the-counter medications and products. They also hope that if Congress won't raise the $2,500 annual limit, lawmakers will at least allow people to roll unspent money into the next year's account or have it returned to them as taxable income.

5. The CLASS Act

What's in the law: This insurance program would allow people to volunteer for a payroll deduction to help them finance long-term care in their own homes if they become disabled.

Purpose: The payments of at least $50 a day can be used for a variety of expenses, including paying for a home health aide or family member who provides care, household modifications, respite care, special transportation or technology needs or to help pay for assisted living expenses. There is no lifetime limit on benefits.

Where it stands: Conservatives argue that the program will quickly outpace its funding and become an entitlement that the country cannot afford. Some of these experts, including the Heritage Foundation, have urged Congress to repeal the provision before CLASS begins operation.

Last year, Rep. Charles Boustany, R-La., introduced a bill requiring Congress to reconsider whether the program was self-sustaining but lawmakers did not act on it.

This story was produced through collaboration between NPR and Kaiser Health News (KHN), an editorially independent news service and a program of the Kaiser Family Foundation, a nonpartisan health care policy organization that isn't affiliated with Kaiser Permanente. Copyright 2011 Kaiser Health News. To see more, visit http://www.kaiserhealthnews.org/.