With a Supreme Court ruling on Obamacare coming down the pipeline, it’s a good idea for the two sides of the debate to have something to say about health care. The Republicans showed their hand last week when the House passed H.R. 436, the Health Care Cost Reduction Act of 2012. You can’t really call it a health care “plan.” The idea is more to let people plan their own health care. So it’s all about tax cuts.
The bill the House passed combines several bills that already existed, a confusing, but common, practice. First, there was the idea in the original version of H.R. 436, which was previously called the “Protect Medical Innovation Act.” The original version repealed an excise tax on medical devices that was scheduled to take effect in January 2013. That tax increase was going to collect a whopping $29 billion dollars over the next ten years. Getting rid of that tax makes medical devices cost that much less for the next ten years.
The content of H.R. 1004, the Medical FSA Improvement Act of 2011 was also rolled into H.R. 436. FSA stands for “flexible spending account.” That’s a tax-advantaged account that allows an employee to set aside a portion of earnings to pay for qualified expenses as established in a cafeteria plan. They’re usually used for medical expenses, but often for dependent care or other expenses. Money deducted from an employee’s pay into an FSA is not subject to payroll taxes, which can save big money. But funds not used by the end of the plan year are lost to the employee. This is known as the “use it or lose it” rule. H.R. 1004 and now H.R. 436 get rid of the “use it or lose it” rule, which leaves about $4 billion with people to spend on health care, dependent care, and so on.
The next thing rolled into H.R. 436 is the content of H.R. 5842, the Restoring Access to Medication Act. That bill repeals provisions of the Internal Revenue Code that were added by the Patient Protection and Affordable Care Act (“Obamacare”). Those provisions limited payments for over-the-counter medications from health savings accounts, medical savings accounts, and flexible spending arrangements. Only prescription drugs or insulin can be paid from these accounts currently. That would allow people to spend about $4 billion more of their money.
Finally, there’s a provision in H.R. 436 that would require collections of certain overpayments of health insurance subsidies. (Apparently, they have to pass a law to prevent overpayments.) That would bring in about $12 billion over the next ten years.
The net result is about $450 in savings per U.S. family. That’s money left with people to spend as they choose (on health care and dependent care), and money that doesn’t get spent by the government. It would also lower the national debt by about $40 per U.S. family. (That’s a small part of the $156,000 every family owes, but it’s something.)
Below are the current votes on H.R. 436 and the two bills that have been rolled into it. Click to vote, comment, learn more, or edit the wiki articles about the bills.