Senate health bill to get major surgery

The Senate's tax committee will begin dissecting the chairman's health care reform proposal at 9 a.m today. Expect the bill to come out of the legislative surgery with substantial changes.

The bill unveiled last week by Senate Finance Committee Chair Max Baucus, D-Mont., actually has already undergone a bit of a makeover. Baucus said that at today's Committee mark-up he'll release a modified version of his bill that will address "a lot of legitimate concerns" that were raised about the original measure.

In addition to those changes, Finance Committee members have offered hundreds of amendments dealing with ways to finance health care reform. The proposed changes fall into three categories:

1. Reforming the health care delivery system,
2. Expanding health care coverage, and the most important (to tax geeks) 
3. Financing comprehensive health care reform.

The added or modified ways to pay for reform include reducing the excise tax on individuals who do not purchase insurance, raising the threshold of the health insurers excise tax and eliminating health savings accounts altogether.

Flexible spending accounts are the subject of several amendments. One calls for capping FSA contributions at $3,000 instead of the $2,000 limit in Baucus' original bill. A couple, offered by Sen. Orrin Hatch, R-Utah, would keep the accounts limit-free, as well as allow the funds to continue to be used to pay for over-the-counter medications.

And an amendment from the Committee's ranking Republican, Charles Grassley, R-Iowa, would prevent fees imposed on the health insurance industry from being passed onto health care consumers in the form of higher insurance premiums.

Obviously, some of these financing changes would cost money rather than come up with funds to pay for health care reform. The authors of such amendments either offer ways to make up that new cost or propose "a proportionate reduction as needed in spending."

Ah, the delusion desperation optimism of politicians when it comes to taxes.

It should make for an interesting session today.

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