WASHINGTON / CATHERINE COLLINS : Business Groups Fighting Democrat-Sponsored Health-Care Reform Bill

There is little dispute that something must be done about the nation’s health-care system. The debate is over who will pay for reform and what the long-term effect will be on wages, employment and the overall profitability of American business and industry.

There are 33 million uninsured and 60 million “under-insured” Americans. In addition, out-of-control costs threaten to price health care out of the reach of the average family and put American businesses at a competitive disadvantage in the international marketplace.

Pledging their determination to reform the nation’s health-care system, Senate Democratic leaders have introduced the HealthAmerica bill (S. 1227). Among those sponsoring the legislation are Senate Majority Leader George Mitchell (D-Me.), and Sens. Edward Kennedy (D-Mass.), Donald Riegle (D-Mich.) and Howard Metzenbaum (D-Ohio.)

At a recent hearing of the Senate Labor and Human Resources Committee to assess the economic impact of the legislation, Kennedy said that since 1980 the per-capita cost of health care has more than doubled in this country. By 2000, he said, health insurance for the average worker will cost more than $15,000 a year. Americans, he said, pay twice as much for health care as Germans and Japanese.

But what do these figures really mean to business? The sticker price of each Chrysler Corp. car built today includes $700 for health care, compared to $200 to $400 for every Japanese car, according to the Detroit auto maker.

“HealthAmerica attacks these problems head-on by guaranteeing every American affordable health insurance coverage, and by establishing a comprehensive program to control health-care costs,” said Kennedy.

Key components of the legislation are: a mandate for employers to provide health insurance or participate in a government program; expansion of the current Medicaid program and increased efforts to contain costs by examining unnecessary care; and blank-check reimbursement to health-care providers.

Despite the increased costs tied to aspects of the bill, Senate staffers contend that the cost-containment measures could save $90 billion in the next five years.

The most controversial element of the bill is the “pay-or-play” provision, which requires employers to provide coverage through a private insurer or join a new federal-state public insurance program called AmeriCare. The program would be funded with a 7% to 8% payroll tax, another controversial aspect of the bill.

Although the business community is not likely to agree, the bill’s sponsors say HealthAmerica is specially tailored to meet the needs of business and industry, particularly small business.

For the first time, the bill would allow self-employed workers or owner-operators of unincorporated businesses to deduct 100% of their health insurance costs. By combining a new 25% tax credit with other tax benefits, other small businesses could deduct about half of their health insurance costs.

In addition, according to Senate staffers, the government-sponsored insurance program will be less expensive than private insurance. Where private insurance for a single employee working at minimum wage would be $1,000, the contribution to AmeriCare for the same employee would be $600.

Still, businessmen have little use for either the mandates or new payroll taxes. The National Small Business Union contends that the AmeriCare portion alone could cost small businesses as much as $30 billion a year.

“We would expect the program to work as efficiently as the Post Office, with the compassion of the IRS and the cost effectiveness of the Pentagon,” said Michael Roush, a lobbyist for the National Federation of Independent Business.

Tax Bill Strives to Simplify ‘Intangibles’

In an attempt to sort out an area of tax law that has been a source of controversy and litigation between business and the Internal Revenue Service since the wave of mergers and acquisitions, the House’s chief tax legislator has introduced a bill to simplify the tax treatment of “intangible” assets.

Under a bill (H.R. 3035) proposed by Rep. Dan Rostenkowski (D-Ill.), chairman of the House Ways and Means Committee, such intangible assets as customer mailing lists would qualify for tax breaks traditionally given to tangible assets such as machinery.

Currently, businesses can amortize the value of assets only if they can prove that the assets have a definite value and a finite life span. The bill would make it possible to amortize intangible assets over 14 years, which Rostenkowski said is the shortest period that would avoid producing a negative revenue effect. “The bill is intended to provide certainty to taxpayers while eliminating the source of much tax litigation and controversy,” said Rostenkowski, adding it would free us resources for taxpayers, IRS and courts.