Alcohol & Soda Not Taxed as Part of Proposed Health Care Bill

The House Ways & Means Committee completed work on the health care bill late last Thursday night. The legislation passed the committee by a vote of 23 to 18, with three Democrats voting against the bill: Representatives Ron Kind (Wis.), Earl Pomeroy (N.D.) and John Tanner (Tenn.). All three are members of the fiscally conservative Blue Dog Coalition, which objects to the costs of the legislation and its effect on our growing deficit.

Of the 50 amendments filed, most were rejected. However, one provision (Section 1620) that was included in the chairman’s substitute and caught the business community by surprise was stricken by unanimous consent. Section 1620 would have enforced the secondary payer statute and allowed plaintiffs who file on behalf of Medicare to recoup 20 – 30 percent of the recovery in suits against insurance companies. This provision had been added at the behest of trial lawyers and was viewed by many in the business community as a means of increasing frivolous lawsuits. The U.S. Chamber will be working to defeat any attempt to include the provision in the Senate bill. The final bill that passed the committee did not include any language that raises taxes on alcohol or soda.
The House Energy & Commerce Committee, which is drafting the health coverage section of the legislation, hoped to complete its work by July 22. House leadership is hoping to complete all committee work this week and move the legislation to the floor for a vote during the week of July 27. However, that could slip into the following week unless they are able to address the concerns of many in the Blue Dog Coalition who are pressing to trim the exorbitant cost of the legislation.

Senate Finance Committee Chairman Max Baucus (D-Mont.) held a series of bipartisan meetings with members on his committee last week, but they have yet to find consensus on how to pay for the cost of their proposal. They may revisit taxing employer-sponsored health plans in light of public comments made last week by the administrator of the Congressional Budget Office (CBO) before the Senate Budget Committee. During questioning, the administrator recommended they tax employer plans. He also stated that the current proposals under consideration do not offer “the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount. On the contrary, the legislation significantly expands the federal responsibility for health-care costs.”

Other possible revenue raisers include health care delivery system reform, health insurance market reform and empowering an independent agency to set Medicare reimbursement rates. We are still being told it is unlikely the Senate will include alcohol taxes, but we were warned, “everything is on the table for consideration.” 

In the states: On July 13, Illinois Governor Pat Quinn (D) finally acted on HB 255. In a blow to the hospitality industry, he signed the public works bill, which included massive increases to the state’s spirits, beer and wine excise tax rates. Effective Sept. 1, the spirits excise tax will increase from $4.50 to $8.55/gallon, wine from $0.73 to $1.39/gallon, and beer from $0.19 to $0.23/gallon.

In North Carolina, the legislature continues to debate the state budget and has again extended the deadline to come to an agreement. On July 7, Governor Bev Perdue (D) released a revised budget proposal that calls for increasing the tax on beer by $0.02 per can, wine by $0.08 per bottle and the spirits excise tax by 2 percent. The Distilled Spirits Council continues working with industry to partners to keep alcohol tax increases out of the state budget.  — DISCUS


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