Service Members Home Ownership Tax Act Of 2009

Floor Speech

SERVICE MEMBERS HOME OWNERSHIP TAX ACT OF 2009 -- (Senate - December 16, 2009)

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Ms. COLLINS. Madam President, I rise today to speak in favor of the motion to commit offered by Senators HUTCHISON and THUNE.

The Hutchison-Thune motion to commit would send the health care bill to the Senate Finance Committee with instructions to revise the bill in a revenue-neutral manner, to prevent taxes in the bill from going into effect before the exchanges are set up in 2014.

The bill makes Americans wait until 2014 to get insurance through the new ``exchanges,'' but it rolls out new tax hikes starting right away. Unless we take action to change this, Americans will see 4 years of tax increases before the chief benefits of this bill become available.

In the 4 years between now and the time the exchanges come online, Americans will face at least a dozen new or increased taxes and fees costing $73 billion.

Some of these taxes start in 2 weeks. For example, a new tax on pharmaceutical manufacturers, which will raise an average of $2.2 billion per year; a new tax on health insurance providers, which will raise $6.7 billion per
year; a new tax on medical device manufacturers, which will raise $2 billion per year.

Other taxes kick in 1 year from now. These include an increased penalty on withdrawals from Health Savings Accounts and a new $2,500 cap on FLEX spending accounts.

These new limits and penalties make no sense to me. Why would we want to impose a penalty on Americans who use money from their FLEX spending accounts to buy over-the-counter medicine? How is that going to help make health care more affordable?

But that is not all the bill does with respect to taxes. In 2013, the bill imposes several more taxes, including a reduction in the tax deductibility of medical expenses, a new high cost insurance excise Tax--the so-called Cadillac tax, and an increase in the Medicare payroll tax for high earners.

These tax increases total $73 billion before 2014, before anyone gets a dollar of subsidy to purchase health insurance in the new exchanges.

These taxes will be paid right away by Americans in the form of higher health insurance premiums. This is not just my opinion; this is what the Congressional Budget concludes too. Here is what the CBO said about the $6.7 billion annual fee on health insurance providers, which is scheduled to begin next year:

We expect a very large portion of [the] proposed insurance industry fee to be borne by purchasers of insurance in the form of higher premiums.

It is not just taxes on insurance that will be passed on to consumers. Taxes on pharmaceutical manufacturers and medical devices makers will also be passed on.

This means that American consumers will see price increases for everything from insulin pumps, to pacemakers, to power wheelchairs and drugs like Prilosec.

As the CBO Director has said:

Those fees would increase costs for the affected firms, which would be passed on to purchasers and would ultimately raise insurance premiums by a corresponding amount.

The Joint Committee on Taxation shares the CBO's view these tax hikes will be passed along to consumers.

Once again, I do not see how imposing these new taxes now--before the exchanges are set up and the chief benefits of the bill are supposed to become available--makes health care more affordable.

For all of these reasons, I will be voting in favor of the Hutchison-Thune motion to recommit, and I would urge my colleagues to do the same.

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