Two Ways the Senate Bill Will Pay for Healthcare Reform

Speaking on the Senate floor about the tax on Tuesday night, Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee, said the tax is expected to also cut excessive healthcare spending in the long run.

Other taxes under consideration in the Senate bill are:

• Imposing a tax on individuals without qualifying coverage of $750 per year—up to a maximum of three times that amount—to be phased in beginning in 2014.
• Increasing the tax on distributions from health savings accounts or an Archer medical savings accounts that are not used for qualified medical expenses to 20% (from 10% for HSAs and from 15% for Archer MSAs) of the disbursed, effective January 1, 2011.
• Increasing the threshold for the itemized deductions for unreimbursed medical expenses from 7.5% of adjusted gross income to 10% of adjusted gross income for regular tax purposes, effective January 1, 2013).
• Increasing the Medicare Part A (hospital insurance) tax rate on wages by 0.5% (from 1.45% to 1.95%) on earnings over $200,000 for individual taxpayers and $250,000 for married couples filing jointly, effective January 1, 2013.
• Setting a new $2.3 billion annual fee on the pharmaceutical manufacturing sector, effective for sales after December 31, 2008.
• Setting a $2 billion annual fee on the medical device manufacturing sector, effective for sales after December 31, 2008.
• Setting a $6.7 billion annual fee on the health insurance sector for net premiums written after December 31, 2008 and third party agreement fees received after December 31, 2008.
• Limiting the deductibility of executive and employee compensation to $500,000 per applicable individual for health insurance providers, effective January 1, 2009.
• Setting a tax of 5% on the amount paid for cosmetic surgical and medical procedures, effective January 1, 2010.