-12-

out-of-pocket health spending by households, resulting in smaller
itemized medical deductions, larger taxable incomes, and higher
income tax revenues. In addition, the Federal assumption of
responsibility for a large portion of health insurance premiums
for early retirees will have the effect of raising corporate
profits and income tax payments. All of these revenue effects are
included in the last line of the revenue table, under "income and
payroll tax effects."

A comparison of Joint Committee staff revenue estimates for
the Health Security Act with those provided by the Administration
in the Fiscal Year 1995 U.S. Budget reveals several provisions
whose estimates vary significantly. For example, the
Administration’s estimate for the 1-percent assessment on
corporate alliances totals approximately $24 billion over fiscal
years 1996 through 2000; the corresponding Joint Committee staff
estimate is $7.6 billion. Underlying the,,lower estimate is a
forecast in which significantly fewer eligible employers will
elect to form corporate alliances. The Administration’s revenue
estimate for repeal of health spending through cafeteria plans is
$21 billion higher than the Joint Committee staff estimate. The
difference stems largely from assumptions regarding the amount of
tax-sheltered health spending that would flow into wages as a
result of the repeal.

Readers should note that estimates for many of the
provisions in the following table are very sensitive to the
details of the Administration’s health reform bill. For example,
changes in the basic health benefits plan, the employer mandate,
or other features of the bill could have significant effects on
revenue estimates for the individual tax provisions in the table.
Thus, many of the estimates contained in the table will change
significantly if included in a different health reform proposal
or enacted separately.



-3-

taxpayers and $115,000 for married taxpayers filing joint
returns. The amount of these payments would be phased in for
taxpayers with modified AGI which exceeds the threshold amount by
less than $15,000 ($30,000 in the case of married taxpayers
filing a joint return if each spouse is required to pay
additional premiums). The provision relating to part B Medicare
premiums would be effective for taxable years beginning after
December 31, 1995. The provision relating to payment of premiums
under the comprehensive benefits package would be effective
January 1, 1998.

Modifi i 1f- fo} £ ha en £ ta.
tion shareh ers ani artner: ec. 7141) .--The bill

would (1) amend the definition of net earnings from
self-employment subject to self-employment taxes to include the
pro rata share of certain S corporation income of certain
shareholders and (2) modify the definition of net earnings from
self-employment as applied to limited partners in a partnership
for self-employment tax and health insurance premiums purposes.
These provisions would apply to taxable years of individuals
beginning after December 31, 1995, and to taxable years of
S corporations and partnerships ending with or within such
taxable years of individuals.

xten Medicare cov: e al ta nd cal
government employees (sec. 7142).--Under present law, State and
local government employees hired before April 1, 1986, are not
covered under Medicare unless a voluntary agreement providing for
such coverage is in effect. The bill would extend Medicare
coverage on a mandatory basis to all employees of State and local
governments not otherwise covered under present law, without
regard to their dates of hire. These employees and their
employers would become liable for the hospital insurance tax, and
the employee would earn credit toward Medicare eligibility. This
provision would apply to services performed by State and local
government employees after September 30, 1995.

Tax _ tre to) -provided heal ar
Ex: i rv loyer- vi rc 1 car
ec. 7201).--Under present law, all employer contributions for

accident or health coverage are excludable from an employee's
income. Under the bill, employer contributions to an accident or
health plan would be excludable from gross income and wages for
income and employment tax purposes only to the extent the
contributions are for (1) the comprehensive benefit package
provided for under the bill, (2) cost sharing amounts under the
comprehensive benefit package (including cost sharing policies)
or (3) permitted coverage. Permitted coverage would mean

(1) coverage providing wages or payments in lieu of wages for any
period during which the employee is absent from work on account
of sickness or injury, (2) coverage providing payment for



-8-

predominant business activity during the taxable year falls in
one of three categories, would be treated as a property and
casualty insurance company. The three categories of activities
would be: (1) issuing accident and health insurance contracts or
reinsuring accident and health risks; (2) operating as an HMO; or
(3) entering into arrangements to provide or arrange for the
provision of health care services in exchange for fixed payments
or premiums that do not vary depending on the amount of health
care services provided.

The bill also would repeal two of the special rules provided
under Code section 833 to Blue Cross and Blue Shield
organizations and other eligible organizations, and would provide
transition rules for organizations that become subject to
section 833 after the effective date. These provisions generally
would be effective for taxable years beginning after December 31,
1996.

Tax treatment of long-term care services and insurance
Long-term care services and insurance (secs. 7701 and

7702) .--The bill would provide that expenditures for qualified
long-term care services provided to an incapacitated individual
are treated as medical care for purposes of the itemized
deduction for medical expenses. The bill would provide that, for
purposes of the Internal Revenue Code: (1) a qualified long-term
care insurance policy is treated as an accident or health
insurance contract; (2) any plan of an employer that provides
coverage under a qualified long-term care insurance policy is
treated as an accident or health insurance contract (so that
employer contributions for such a policy are excludable from
income); (3) amounts (other than policy holder dividends or
premium refunds) received under such a contract or plan with
respect to qualified long-term care services are treated as
amounts received for personal injuries or sickness and as
reimbursements for expenses actually incurred for purposes of the
medical expense deduction (and thus, are excludable from gross
income); (4) amounts paid for a qualified long-term care
insurance policy are treated as amounts paid for insurance for
purposes of the medical expense deduction, and (5) a qualified
long-term care insurance policy is treated as a guaranteed
renewable contract subject to the rules of Code section 816(e).

The provision relating to the deductibility of expenses for
qualified long-term care services would apply to taxable years
beginning after December 31, 1995: The other provisions of the
bill relating to long-term care would apply to policies issued
after December 31, 1995.



aed ipa:

-5-

recently issued a revenue ruling’ stating that previous rulings‘
permitting a current deduction for fees for medical services to
be provided in the future (if at all) should not be interpreted
to allow a current deduction of payments for medical care
(including medical insurance) extending substantially beyond the
close of the taxable year in situations where the future care is
not purchased in connection with obtaining lifetime care of the
type described in the earlier rulings. Under the bill, for
purposes of this itemized deduction, amounts paid during a
taxable year that are allocable to insurance coverage or medical
care to be provided during periods more than 12 months after the
month in which the payment is made would be treated as paid
ratably over the period during which the coverage or care is to
be provided. This limitation would not apply to any premium paid
under a qualified long-term care policy. The provision would
apply to amounts paid after December 31, 1996.

oyment. ovi
Definition of employee (secs. 7301 and 7303).--The bill

would repeal section 530 of the Revenue Act of 1978, which
provides safe harbor rules under which service recipients can
treat individuals as not being employees for employment tax
purposes. The bill would codify a modified version of section 530
which would protect taxpayers against retroactive
reclassification of workers as employees. The bill would also
give the Secretary of the Treasury the authority to define the
term "employee" by prospective regulations. The modified rules
would generally apply for income tax purposes, employment tax
purposes, and the bill’s health care provisions. The provision
relating to section 530 would generally be effective for periods
beginning after December 31, 1995. The provision authorizing
regulations would be effective on the date of enactment.

ner ein iti or failure ile ‘rent
in. ti turn: ith r ec non- 107
sec. 7302).--The Internal Revenue Code contains a number of
information reporting requirements. The bill would modify the
penalties for failure to comply with these requirements in the
case of two types of information returns: (1) information returns
under Code section 6041(a) which relate to payments to any person

3 Rev. Rul. 93-72, 1993-34 IRB 7 (Nov. 1, 1993). The ruling
applies to amounts paid on or after October 14, 1993, except
amounts paid pursuant to the terms of a binding contract entered
into before that date.

* Rev. Rul. 75-302, 1975-2 C.B. 86; Rev. Rul. 75-303, 1975-2
C.B. 87; Rev. Rul. 76-481, 1976-2 C.B. 82.



-4-

permanent injuries of an employee, or his or her spouse or
dependent, that are computed with reference to the nature of the
injury without regard to the period the employee is absent from
work, (3) retiree health coverage provided to former employees
after age 65, (4) coverage under a qualified long-term care
policy, (5) coverage provided under Federal law to veterans or
any member of the Armed Forces of the United States and their
spouses and dependents, and (6) any other employer-provided
coverage which the Secretary of the Treasury determines should be
excludable.

The limit on the exclusion for employer-provided accident or
health coverage would be effective on and after January 1, 2004,
except that it would apply to flexible spending accounts on and
after January 1, 1997. For this purposes, a flexible spending
account would be defined as a benefit program that provides
employees with coverage under which specified, incurred expenses
may be reimbursed and under which the maximum amount of
reimbursement that is reasonably available to a participant for
such coverage is less than 200 percent of the value of such
coverage.

Cafeteri lan 7 .--Under the bill, accident or
health coverage could not be provided through a cafeteria plan
unless the coverage constitutes wages or payments in lieu of
wages for any period during which the employee is absent from
work on account of sickness or injury. This provision would be
effective on and after January 1, 1997.

H i ense £ if -em) indivi

sec. 7203).--Under prior law, self-employed individuals could
deduct 25 percent of the health insurance costs for themselves
and their spouses or dependents. This deduction expired
December 31, 1993. The bill would make the deduction for health
insurance expenses permanent. In addition, effective on the
earlier of January 1, 1997, or the first day on which the
taxpayer could purchase comprehensive health coverage under the
bill, up to 100 percent of the cost of the comprehensive health
coverage could be deductible. The 25-percent deduction would
continue until the 100-percent deduction is available.

Limitation on prepayment of medical insurance premiums
(sec. _7204).--Under present law, taxpayers who itemize deductions
may deduct amounts paid during the taxable year (if not
reimbursed by insurance or otherwise) for medical care of the
taxpayer and the taxpayer’s spouse or dependents to the extent
that the total of such expenses exceeds 7.5 percent of the
taxpayer’s adjusted gross income. The Internal Revenue Service



Tax treatment of organizations providing health care services and

related organizations (secs. 7601-7603)

The bill would establish certain new requirements applicable
to nonprofit health care providers (hospitals and health
maintenance organizations (HMOs)) seeking to qualify as
tax-exempt charitable organizations under Code section 501(c) (3).
In particular, the bill would amend the Code specifically to
require that, in order for the provision of health care services
to constitute a charitable activity for purposes of section
501(c) (3), the organization providing such services must
periodically assesses the health care needs of its community and
develop a plan to meet those needs. In addition, the bill would
provide that an HMO seeking tax-exempt status under
section 501(c)(3) must furnish health care services to its
members at its own facilities through health care professionals
who do not provide substantial health care services other than on
behalf of such organization. These provisions would be effective
January 1, 1995.

The bill further would provide that organizations which
serve as parent holding companies for hospitals or medical
research organizations constitute public charities rather than
private foundations. The bill also would add the
to-be-established regional alliances to the list of tax-exempt
organizations set forth in section 501(c). These provisions would
be effective on the date of enactment.

The bill also would subject HMOs that are exempt under
either 501(c) (3) or 501(c) (4) to new rules defining
"commercial-type" insurance for purposes of section 501(m). In
general, health insurance provided by an HMO would be treated as
commercial-type insurance if it relates to care which is not
provided pursuant to a pre-existing arrangement between the HMO
and a health care provider (other than emergency care provided to
a member of such organization at a location outside such member’s
area of residence). The bill would identify four types of health
insurance provided by an HMO that would not be treated as
commercial-type insurance and thus, would not jeopardize the
organization’s tax-exempt status. Such non-commercial-type health
insurance coverages generally would address emergency situations
and situations in which a health care provider has a pre-existing
relationship with an HMO whereby the HMO exerts control over
either the fee charged by the service provider or the member’s
use of such provider’s services. These provisions would be
effective on the date of enactment.

The bill also would redefine the scope of organizations
treated as taxable property and casualty insurance companies.
Effective for taxable years beginning after December 31, 1996,
any organization that is not tax-exempt, and whose primary and


SUMMARY AND ESTIMATED REVENUE EFFECTS
OF TAX PROVISIONS
OF THE ADMINISTRATION’S HEALTH SECURITY ACT

Prepared by the Staff
of the
JOINT COMMITTEE ON TAXATION

February 8, 1994
JCX-1-94



-10-

financing. Similarly, State guaranty funds established pursuant
to section 1204 of the bill would be treated as private business
users and generally could not be funded with the proceeds of
tax-exempt bonds. This provision would be effective for
obligations issued after the date of enactment.

Disclosure of return information (sec. 7903).--The Internal

Revenue Code prohibits disclosure of tax returns and return
information, except to the extent specifically authorized by the
Code. The bill would permit disclosure of certain tax return
information to any Federal or State agency providing assistance
under the Health Security Act for use in verifying eligibility
for such assistance. The provision would be effective on the date
of enactment.



-9-

A lerated di enefits under life in a contr: s
(secs. 7703 and _7704).--Effective for taxable years beginning
after December 31, 1993, the bill would provide an exclusion from
gross income for certain distributions (accelerated death
benefits) received by an individual under a life insurance
contract if the insured under the contract is terminally ill. For
insurance company tax purposes, the bill would provide that a
qualified accelerated death benefit rider to a life insurance
contract is treated as life insurance and that such a rider is
treated as a qualified additional benefit. The provision relating
to the tax treatment of insurance companies would apply to
contracts issued after December 31, 1993.

Tax incentives for health services providers

N efundable credit for rtai ris h_ servic
providers (sec. 7801).--Under the bill, a physician who provides

primary health services in certain medically underserved areas
would be eligible for a nonrefundable credit against Federal
income taxes of $1,000 per month for up to 60 months. The
provision would be effective for taxable years beginning after
December 31, 1994.

E: sin i equi nm e 7802) .--Under present
law, in lieu of taking depreciation, a taxpayer with a
sufficiently small amount of annual investment may elect to
deduct up to $17,500 of the cost of qualifying property placed in
service for the taxable year under Code section 179. The bill
would increase the amount allowed to be deducted under section
179 in a taxable year by the lesser of (1) the cost of section
179 property which is health care property placed in service
during the year, or (2) $10,000. The provision would apply to
property placed in service after December 31, 1994.

ise 20u: OV: n:

credit for per assistan rvices
(sec. 7901).--Effective for taxable years beginning after
December 31, 1995, the bill would provide a nonrefundable tax
credit for up to 50 percent of an employed individual’s personal
assistance expenses up to $15,000.

Denial of tax-exempt status for borrowings of health-related

entities (sec. 7902).--Under present law, interest on bonds
issued to finance activities of State and local governments
generally is tax exempt. However, interest on private activity
bonds is taxable unless the bonds are issued for a purpose
specifically identified in the Internal Revenue Code. The bill
would provide that regional and corporate health alliances
created pursuant to the bill would be treated as private
businesses that are generally not eligible for tax-exempt



-6-

for services performed by such person (other than as an
employee); and (2) returns regarding remuneration for services
under Code section 6041A(a). Both of these sections of the Code
relate to information returns with respect to payments made to
non-employees, such as independent contractors. In general, the
bill would increase the penalty for failure to file correct
information returns on or before August 1 from $50 for each
return to the greater of $50 or 5 percent of the amount required
to be reported correctly but not so reported. The provision would
apply to information returns the due date for which (without
regard to extensions) is more than 30 days after the date of
enactment.

r treatment of funding of retir heal nefi cs. 74
and 7402)

Under present law, an employer may deduct contributions,
within limits, made to a welfare benefit fund to prefund
post-retirement medical and life insurance benefits. These rules
generally permit the cost of the benefits to be funded over the
working life of the employee. In addition, retiree medical
benefits may be prefunded (within limits) through a separate
account maintained under a tax-qualified pension plan (Code
sec. 401(h}).

Effective with respect to contributions paid or accrued
after December 31, 1994, the bill would provide that the minimum
period during which the cost of post-retirement medical and life
insurance coverage could be funded under a welfare benefit fund
would be at least 10 years. In addition, contributions would not
be permitted to be made to retiree medical accounts under pension
plans after December 31, 1994.

xrdination w: mi 7501

The health care continuation rules require that qualified
beneficiaries that received coverage under a group health plan be
provided the opportunity to purchase health insurance for a
specified period under the group health plan after the occurrence
of a qualifying event (e.g., termination of employment) that
otherwise would have terminated such health insurance coverage.
These rules are designed to prevent gaps in health care coverage.
The bill would repeal the health care continuation rules,
effective on the earlier of January 1, 1998, or the first day of
the calendar year following the calendar year in which each State
has in effect health plans under which individuals are eligible
to receive comprehensive health coverage under the bill.



I. SUMMARY OF PROVISIONS IN TITLE VII OF THE HEALTH SECURITY ACT

The Health Security Act (the "bill") would make a number of
changes to the Internal Revenue Code (the "Code"). Some of these
changes are intended to be financing provisions for the health
care provisions of the bill and some are intended as revisions of
health care-related provisions in the Code. These provisions are
contained in Title VII of the bill.

Financing provisions
Increase in tobacco excise taxes (secs. 7111-7113) .--The

bill would increase the tax rate on cigarettes by $0.75 per pack
of 20 cigarettes, with comparable increases based on tobacco
content being imposed on other tobacco products. The provisions
would be effective for tobacco products removed from a bonded
production premises after September 30, 1994. A floor stocks tax
would be imposed on tobacco products held on the effective date.

Assessment on corporate alliance employers (sec. 7121) .--The

bill would impose an annual assessment equal to 1 percent of
payroll on large employers that elect to form corporate
alliances. The assessment would be effective on January 1, 1996.

Temporary assessment on employers with retiree health costs
(sec. 7121).--In general, the bill would provide that the cost of

providing the comprehensive benefit package to retirees between
the ages of 55 and 65 is to be paid by the Federal Government. In
some cases, employers may have had plans which obligated them to
pay these retiree medical costs. To prevent a windfall to such
employers, the bill would impose a temporary assessment on all
employers with retiree health costs for the period 1991 to 1993
(the "base period"). The assessment for a year would be equal to
50 percent of the greater of (1) the "adjusted base period
retiree health costs" of the employer for the year, or (2) the
amount by which the employer’s applicable retiree health costs
for the year were reduced by reason of the enactment of the
Health Security Act. The temporary assessment would apply to
1998, 1999, and 2000.

Recapture of certain health care subsidies received by
high-income individuals (sec. 7131).--Under the bill, taxpayers

with modified adjusted gross income (AGI) above a threshold
amount would be required to pay additional premiums for coverage
under part B of Medicare. In addition, eligible retirees and
qualified spouses and children with modified AGI above the
threshold amount would be required to pay the employer share of
their premium for health care under the comprehensive benefit
package. The threshold amount would be $90,000 for unmarried



ESTIMATED REVENUE EFFECTS OF TAX PROVISIONS IN THE

HEALTH SECURITY ACT

Fiscal Years 1995-2004

8-Feb-94

Joint Committee on Taxation

[Billions of Dollars}
Section Provision Effective 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995-04
7111.- Increase in excise taxes on tobacco

7113. products...... 10/1/94 14.2 11.4 11.2 10.9 10.5 10.3 10.0 9.8 9.7 9.5 107.5
7121. Assessment on corporate alliance

employers... a 1/1/96 oa 1.4 1.7 1.6 1.5 1.4 1.3 1.2 1.2 1.3 12.5
7121. Temporary assessment on employers with @

retiree health benefit costs........ a 1/1/98 - - - 29 47 5.1 1.8 - ” - 14.5
7131. Recapture of certain health care subsidies

received by high-income individuals............ 1/1/96 - oo 1.7 aml 1.4 1.7 21 2.6 3.2 3.9 - 17.7
7141. Modification to self-employment tax

treatment of certain S corporation share-

holders and partners....... . 1/1/96 - 0.2 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.7 47
7142. Extending of Medicare coverage of, and

application of hospital insurance tax to all

State and focal government employees (1)... 10/1/95 - 1.6 1.6 1.5 1.5 1.4 1.4 1.3 1.2 11 12.6
7201. Limitation on exclusion for employer-

provided health benefits other than 1/1/04

flexible spending arrangements..... (2) - - 7 - ~ 7 - - +> --- Negligible - - -
7202. Health benefits may not be provided

under cafeteria plans (3)..... 1/1/97 - 7 1.0 1.8 3.1 4.2 5.3 6.0 6.7 7.3 35.4
7203. Deduction for health insurance costs

of self-employed individuals...... 1/1/94 0.8 -0.7 1.0 1.8 21 2.3 2.5 2.6 2.8 -3.0 -19.6



Page 3 of Table

Section Provision Effective 1995 1996 1997 1998 1999 2000 2001

2002

2003

2004 1995-04

7903. Disclosure of return information for
administration of certain programs under

the Health Security Act..... - DoE + -

Income and payroll tax effects of employer mandate,
cost containment, and other non-tax provisions..... wesc - -0.1 0.5 3.7 8.1 11.8 15.8 21.8 27.7 33.8 123.2
GRAND TOTALG..... 134 13.8 16.7 21.7 286 334 349 396 46.3 53.3 301.5

Joint Committee on Taxation

NOTE: Details may not add to totals due to rounding.

Legend for "Effective" column: DoE = date of enactment
ird 30/DoE = information returns due 30 days after date of enactment
ppisa = property placed in service after
tyba = taxable years beginning after

(1) Estimate provided by the Congressional Budget Office.

(2) The effective date of the limitation on the exclusion for benefits provided under a flexible spending arrangement is 1/1/97.
(3) Estimate includes the effects of prohibiting the use of flexible spending arrangements for health care expenses.

(4) Effective no earlier than 6 months after proposed regulations are issued.

(5) Gain of less than $1 million.

(6) Gain of less than $5 million.

(7) Loss of less than $50 million.

(8) With a delayed effective date for collectively bargained plans.

(9) Gain of less than $25 million.

'10) Gain of less than $100 million.

“S|-


INTRODUCTION

This document,! prepared by the staff of the Joint
Committee on Taxation, provides a summary and estimated
revenue effects of the tax provisions of the Administration’s
proposed Health Security Act (introduced in H.R. 3600,

S. 1757, and S. 1775) .?

Part I of the document is a brief summary of the tax
provisions of the bill (Title VII); and Part II shows the
estimated revenue effects of the tax provisions of the bill.

' This document May be cited as follows: Joint Committee on
Taxation, Summary and Estimated Revenue Effects of the Tax
Provisions of the Administration’s Health Security Act (JCX-1-

94), February 8, 1994.

? For a detailed description and analysis of the tax

provisions, see Joint committee on Taxation, D s i fe) id
Analysis of Title VII of H.R. 3600, S. 1757, and S. 1775 ("Health
i ") (JCS-20-93), December 20, 1993. See also, Joint

Committee on Taxation, Description and Analysis of the Employer
R £ ovision: £ : ("Health Security

n
Act") (JCS-1-94), February 2, 1994.



INTRODUCTION. . 2. 2 2... we eee ee

I.

Il.

SUMMARY OF PROVISIONS IN TITLE VII OF THE
HEALTH SECURITY ACT. . ..- 2... es

ESTIMATED REVENUE EFFECTS OF TAX
PROVISIONS IN THE HEALTH SECURITY ACT. .



-11-

II. ESTIMATED REVENUE EFFECTS OF
TAX PROVISIONS IN THE HEALTH SECURITY ACT

The following table shows the estimated revenue effects of
the various tax provisions in the Administration’s proposed
Health Security Act for fiscal years 1995 through 2004. These
revenue estimates were prepared by the staff of the Joint
Committee on Taxation (Joint Committee staff) in cooperation with
the Congressional Budget Office (CBO) as it prepared estimates of
the outlay effects of the Health Security Act.

The Joint Committee staff normally does not provide revenue
estimates for fiscal years outside the standard five-year budget
window (fiscal years 1995 through 1999), but an exception has
been made for the Health Security Act for two reasons. First,
the full impact of many provisions of the Act would not be
apparent until the year 2000 or later. Second, the Congressional
Budget Office has prepared baseline macroeconomic forecasts and
baseline health expenditure forecasts through calendar year 2004
for the purpose of estimating the outlay effects of the Act.
These macroeconomic forecasts are a necessary input for revenue
estimation, and are not otherwise available for years outside the
five-year budget window.

Each of the revenue provisions in the Health Security Act
has been estimated under the assumption that it is the last to be
implemented. Thus, each line item in the revenue table represents
the marginal effect of adding the applicable tax provision to the
bill, assuming that all other provisions are in place. Readers
should exercise caution in the use of these revenue estimates. If
two or more tax provisions were deleted from the bill,
interactions among the provisions May cause the total change in
tax revenues to be smaller or larger than the sum of the amounts
shown separately for each tax provision.

The revenue effects presented here include the impact of
certain non-revenue provisions of the bill. For example, the
Health Security Act contains a mandate for employers to
contribute to the cost of health insurance for most active
workers. However, it is assumed that the Act would have the
overall effect of reducing total employer spending on health
insurance. This reduction is attributable to two features of the
bill: (1) the cost containment provisions (including the caps on
premium increases) which are assumed to result in slower growth
of health insurance premiums, and (2) the Federal subsidies to
certain employers which reduce the amounts that employers would
otherwise be required to pay. The reduction in employer
contributions for health insurance is assumed to result in higher
cash wages for active workers, and higher income and payroll tax
revenues. Universal health insurance coverage would also reduce



Page 2 of Table

Section Provision Effective 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995-04

7204. Limitation on prepayment of health

insurance premiums. WW97 ~~ eee ee 2 ee ee ee Negligible Revenue Effect---------------- oo
7301. Definition of employee....... (4) -+------+------- [Included with Sec. 7303.]------------+---- ~
7302. Increase in services reporting penalties....... ird30/DoE - - - (5) (5) (5) (5) (5) (5) (5) (6)
7303. Revision of section 530 safe-harbor rules... 1/1/96 - (7) (7) (7) (7) (7) (7) (7) (7) (7) 0.1
7401. Post-retirement medical and life insurance

reserves... W195 7 2 eee ee eee eee Negligible Revenue Effect----------------
7402. Health benefits accounts maintained by

pension plans..... 1/1/95 (8) - (9) (9) (9) (9) (9) (9) (9) (9) (9) (10)
7501. Coordination with COBRA continuing-care

provisions... W198 ~~ --- ~~ --- eee eee Negligible Revenue Effect---------------- a
7601. Treatment of nonprofit health care

organizations... W195 7 ee 7 ee ee ee eee No Revenue Effect----------------- —

7602. Elimination of special rules applicable to
certain taxable insurance companies........... tyba 12/31/96 - - 0.1 01 0.1 041 0.1 0.1 0.1 0.4 08

7603, Exemption from income tax for regional

alliances....... tybaDo0E  -------------+----- No Revenue Effect----------------- _
7701. Qualified long-term care services treated

as medical care...... 1/1/96 ~ (7) 0.1 0.1 -0.1 0.4 -0.2 0.2 0.2 0.2 13
7702. Treatment of long-term care insurance. 1/1/96 -- (7) -0.3 -0.3 0.4 -0.5 -0.6 -0.7 -0.8 -0.9 -4.6

7703. Tax treatment of accelerated death
benefits under life insurance contracts........ 1/1/94 0.1 0.1 0.1 01 0.1 0.1 0.1 0.1 -0.1 0.1 -0.5

7704, Tax treatment of companies issuing quali

fied accelerated death benefits rider: 1/1/94 (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) -0.1
7801. Nonrefundable credit for certain primary

health services providers... 1/1/95 (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) 0.1
7802. Expensing of medical equipmer ppisa 12/31/94 (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) 01

7901. Tax credit for cost of personal assistance
services required by employed individuals... 1/1/96 -- (7) -0.1 -0.1 -0.1 01 -0.1 -0.2 -0.2 -0.2 -1.0

7902. Denial of tax-exempt status for borrowings

of health care-related entities... DoE

phe