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One of Oberstar’s worries about health care bill: provision that could hurt state’s paper industry


Demonstrators hold signs during a "House call" rally against proposed healthcare reform legislation at the Capitol Thursday.
REUTERS/Kevin Lamarque
Demonstrators hold signs during a “House call” rally against proposed health-care reform legislation at the Capitol Thursday.

WASHINGTON, D.C. — As House Speaker Nancy Pelosi tries to corral enough votes to pass the most ambitious health care legislation in a generation, the Minnesota delegation’s most senior Democratic lawmaker remains undecided about the bill.

At issue for Rep. Jim Oberstar is a number of separate concerns including Medicare payment reforms, the possible use of taxpayer dollars to pay for abortions and a newly added measure that could hurt Minnesota’s paper industry.

The provision — buried in the 1,990-page bill — would prevent paper producers from claiming a tax credit for the production of “black liquor,” a viscous wood byproduct that paper mills use to generate about two-thirds of their own electricity.

House Democratic tax writers estimate that banning paper producers from the tax credit would save the government $24 billion over the next 10 years.

But Oberstar, who is still reviewing the language in the bill, is worried that it might hurt one of his district’s most important industries, which has already been impaired by a depressed economy and a decreased demand for paper products.

“From a legislative standpoint, we have to make sure that we protect a vital industry in our district and in our state,” said Oberstar spokesman John Schadl. “We are not interested in having language that could potentially cut off Minnesota paper producers from an important tax credit.”

In Minnesota, the pulp paper industry employs 3,322 people, according to Minnesota Forest Industries.

It all started with the Senate…
Understanding how a measure affecting the paper industry even got into a health care bill, however, requires looking to the unemployment benefits extension that the Senate passed on Wednesday.

In that piece of legislation, the Senate also expanded the homebuyers’ tax credit and gave tax refunds to certain businesses.

But, to pay for those measures, the Senate used an offset in the House health-care reform bill. So, House tax writers needed to procure more money and found it in the $24 billion black-liquor provision, pushed forward by Rep. Chris Van Hollen, D-Md., a member of the House Ways and Means Committee and chairman of the Democratic Congressional Campaign Committee.

The Van Hollen measure essentially prevents paper companies from taking advantage of an existing tax credit for “second generation” cellulosic biofuels.

Some paper producers have already been claiming a separate alternative energy credit by adding small amounts of diesel to their black liquor — a move that spurred controversy earlier this year, pitting the paper industry against environmental groups that saw it as a perversion of a financial incentive intended to help wean the country off of fossil fuels.

That credit is set to expire by the end of the year and some lawmakers like Van Hollen have expressed worries that the paper companies might switch to the cellulosic biofuel credit, which the Internal Revenue Service recently reported might be possible.

But an industry lobbying group said on Thursday that such a move would be difficult considering black liquor would have to be approved for the credit by the Environmental Protection Agency under the Clean Air Act.

“We don’t think we qualify for this and aren’t pursuing it,” said Scott Milburn, executive director of Strategic Communications for the American Forest & Paper Association. “With that said, we think health care spending should be paid for with health care savings not energy programs, and that if policymakers are going to restrict one energy program it is important to be careful to avoid unintended ricochets in other, unrelated ones.”

David Elstone, a forest products analyst for Equity Research Associates in British Columbia, indicated that the $24 billion essentially amounted to a “shell game” on the part of tax writers desperate to come up with more money to fund their bill.

“Although the IRS said that black liquor would be suitable, it is still very unclear if it would actually qualify [for the cellulosic biofuel credit] because there are other stipulations with the EPA,” Elstone said. “It appears, in many respects, that Van Hollen has created $24 billion out of thin air.”

Oberstar’s unease with the legislation, however, goes beyond the disputed tax credit and the paper industry.

Rep. Jim Oberstar
Rep. Jim Oberstar

As he indicated last week, Oberstar is still not entirely confident that the Medicare payment reform studies included in the bill will go far enough in closing the Medicare reimbursement gap that currently disadvantages Minnesota. In addition, there is also the abortion issue, which House Democratic leaders are currently trying to work out with about 40 Democrats, who form a large enough bloc to derail the legislation.

The abortion issue
The group of Democrats — including Oberstar, who is a member of the House Pro-life Caucus — oppose the use of federal funds to pay for abortion services in keeping with a 1976 law that generally bans federal taxpayer dollars from being used for the procedure. (Exceptions can occur in cases of rape or incest or when the mother’s life is in danger.)

They argue, in part, that the federal subsidies in the health care bill, which would go to people who cannot afford coverage, could be used to purchase plans that cover abortion. In addition, some have taken issue with the government insurance plan, now included in the House version of the legislation, which would give the secretary of Health and Human Services discretion over whether to have the public option cover abortions or not.

“…[W]e cannot support any health care reform proposal unless it explicitly excludes abortion from the scope of any government-defined or subsidized health insurance plan,” a group of 17 Democrats, including Oberstar and Minnesota Rep. Collin Peterson, wrote to Pelosi in July. “We believe that a government-defined or subsidized health insurance plan, should not be used to fund abortion.”

In an attempt to address some of these concerns, Rep. Lois Capps, D-Calif., offered an amendment to the legislation earlier this year that would allow people receiving subsidies to purchase plans that cover abortion, but would require insurers to only use individual or employer health-care premiums to pay for the procedure.

In essence, insurance companies would be responsible for separating their pubic dollars from private and could only use private funds to pay for abortions.

But, Rep. Stupak, D-Mich., who has led the Democratic effort against this approach, has said that it amounts to an accounting slight of hand and that federal money would still be helping people to purchase plans that cover abortion.

“Oberstar’s primary concern with Capps is that it is not clear,” Schadl said. “We want the Capps amendment to be absolutely clear that tax dollars would not be used for abortion services.”

In July, Stupak tried to have a provision inserted in the bill that would bar health care plans that cover abortion from the health care exchanges.

The measure, along with a similar attempt in the Senate, was rejected.

Some proponents of tighter restrictions have pointed to the federal employee health-benefits program, which covers about 8 million people and currently excludes plans that include abortion, as an example of an acceptable plan.

But those who support the Capps amendment say that if a Stupak-like proposal ultimately passed, millions of women in the country may lose abortion coverage if they require subsidies to help pay for insurance.

“We don’t think that people should lose coverage they currently have, I mean we have been promised that by the president on down,” said Judy Waxman, vice president for Health and Reproductive Rights at the National Women’s Law Center.

Waxman added that something like the Capps amendment would be workable for insurance companies.

“Administratively, it is not hard to keep track of where your money is coming from and going to,” Waxman said. “People say it is fungible, all from the same pot, and it isn’t. Insurance companies know how to keep money separate.”

Other views in Minnesota delegation
By this morning, the House will have 258 Democrats. Pelosi needs 218 of those to pass the bill.

Ultimately, members will have to weigh what they see as the bill’s benefits and costs against how it may help or hurt their constituents against their personal views of the legislation. All with the knowledge that if a bill passes out of the House and Senate, those two bills will be merged and further modification will be possible.

Rep. Betty McCollum, D-Minn., confirmed Thursday that she would support the legislation.

“I intend to vote to pass the Affordable Health Care for America Act, which is a historic step forward for a healthier, stronger nation,” McCollum said in a statement. “This is a strong bill that is good for families throughout Minnesota and America.”

Although they have not formally said that they will support the bill, Minnesota Democratic Reps. Tim Walz and Keith Ellison appeared to be leaning toward a “yes” vote as of last week.

On the other side, Peterson appeared to be tilting toward a “no” vote along with Minnesota Republican Reps. John Kline, Erik Paulsen and Michele Bachmann.

Cynthia Dizikes covers Minnesota’s congressional delegation and reports on issues and developments in Washington, D.C. She can be reached at cdizikes[at]minnpost[dot]com.