Plus: Producer Prices Fall in February and U.S. Reevaluates Trade Links with Asia.

U.S. Health Care Reform Bill Passes
The House of Representatives last night passed “the most sweeping U.S. health-care legislation in four decades,” Bloomberg News reports. The Senate-approved health-care reform measure constitutes the biggest expansion of federal health care guarantees since the enactment of Medicare and Medicaid more than four decades ago.

The legislation “would make a nearly $1-trillion commitment in taxpayer money over the next decade to help an estimated 32 million uninsured Americans get health coverage,” the Los Angeles Times says.

“The uninsured are clearly the biggest beneficiaries of the legislation, which would extend the health care safety net for the lowest-income Americans,” the New York Times reports. “For people already covered by a large employer — most Americans, in other words — the effect would not be as significant. And yet, just about everyone might benefit from tighter insurance regulations.

After giving final approval to the bill (with a 219-to-212 vote), the House adopted a package of changes to the health-care legislation. That package will now go to the Senate for final approval as soon as this week.

Opponents to the bill say the plan would saddle the nation with unaffordable levels of debt, leave states with expensive new obligations, weaken Medicare and give the government a large new role in the health-care system.

“Business groups, including the U.S. Chamber of Commerce, lobbied against the legislation, and Peoria, Illinois-based Caterpillar Inc. sent a letter to leaders saying the bills would raise its costs by $100 million in the first year alone,” Bloomberg reports.

The National Association of Manufacturers (NAM) issued a statement immediately following passage of the health care bill. NAM President John Engler said, “It is unfortunate that the House of Representatives passed a health care bill that is going to increase costs and make it difficult for manufacturers to continue to offer generous health benefits.” Manufacturers “oppose many of the provisions in this legislation, as they would increase their health care costs,” including “excise taxes on health insurance plans which would adversely impact many companies with older workforces and/or smaller self-insured plans” and “new industry-specific fees that single out particular industries to pay for health care reform.”

The two bills together will cost $940 billion over 10 years, according to the independent, nonpartisan Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT). The CBO estimates the package (including the reconciliation measure) will push the federal budget deficit $143 billion lower over 10 years, up from $138 billion in the CBO and JCT’s earlier estimate.

“The bill is offset in part by a Medicare payroll tax on unearned income and a tax on high-cost plans,” Government Executive reports. “The bill making the fixes fully closes the Medicare Part D coverage gap known as the doughnut hole by the end of the decade.”

New costs, according to the budget office, would be more than offset by savings in Medicare and by new taxes and fees, including a tax on high-cost employer-sponsored health plans and a tax on the investment income of the most affluent Americans.

(For a chronological breakdown of immediate and long-term changes to the nation’s health care system, see the Wall Street Journal.)

Wholesale Prices Fall in February
U.S. producer prices fell for the first time in four months in February, marking a significant drop in pricing for wholesale goods across a range of industries, new data shows.

According to the latest producer price index from the U.S. Department of Labor, finished goods prices declined by 0.6 percent in February, following 1.4 percent gains in January and 0.4 percent gains in December. The February decline ended a four-month upward trend and was the largest producer price drop in seven months. Intermediate goods prices rose 1 percent, while crude goods fell 3.5 percent.

The Labor Department attributes the February decline to energy prices, which dropped 2.9 percent last month. A 7.9 percent decline in the gasoline index, as well as lower prices for home heating oil and liquefied petroleum, accounted for much of the energy pricing fluctuations.

According to Reuters, experts predicted a decline of only 0.2 percent in February. Although the steeper drop likely signals an easing of inflationary pressures, concerns remain about how the mounting economic recovery will affect long-term pricing.

“Investors are starting to pay more attention to inflation now that the U.S. economy’s recovery is more firmly in place,” the Wall Street Journal reports. “Some inflation readings have actually been falling recently, giving the Fed continued reason to keep interest rates near zero to bolster the economy’s recovery.”

Shifts in U.S.-Asia Trade Relations
Government trade representatives from the U.S. and India last Wednesday signed a new agreement to improve cooperation and further boost rapidly increasing trade between the two counties, which has nearly doubled in the past five years.

“There is almost limitless potential for growth in trade between our two countries, and that can contribute to economic recovery and job creation in the United States and continued economic growth in India,” U.S. Ambassador Ron Kirk said in an announcement of the pact.

The agreement will focus on expanding commerce and creating new jobs in small and medium-sized businesses through macroeconomic policies, an increased commitment to investment partnerships and improved collaboration between small and midsized enterprises, Agence France-Presse notes.

This new initiative differs drastically from the increasingly confrontational U.S.-China trade relationship, with a senior Chinese official recently warning that tariffs on Chinese imports may precipitate a “trade war” between the two economies.

“If some congressmen insist on labeling China as a currency manipulator and slap punitive tariffs on Chinese products, then the [Chinese] government will find it impossible not to react,” Chinese Commerce Minister Chen Deming told the Washington Post last week. “If the United States uses the exchange rate to start a new trade war, China will be hurt. But the American people and U.S. companies will be hurt even more.”

The dispute revolves around an upcoming evaluation by the U.S. Treasury to determine whether China is unfairly holding down its currency exchange rate to remain more competitive in international markets, which would lead to new trade restrictions on the U.S. side, Reuters reports. Meanwhile, China claims such measures would be a display of trade protectionism that would do little to shift the trade imbalance between the two countries.