Obama Reportedly Backs ‘Cadillac Tax’ In Final Health Bill
President Barack Obama "told House Democratic leaders at a meeting on Wednesday that they should include a tax on high-priced insurance policies favored by the Senate in the final version of far-reaching health care legislation, aides said," The New York Times reports. "The White House has long expressed a preference for the excise tax on high-cost plans, which health economists say could be an important tool in controlling long-term health care spending for the government and for individuals and families. But House Democrats have resisted the idea, which is also strongly opposed by many organized labor groups - an important part of the party's base - because the tax may hit a number of more generous union-sponsored health plans" (Herszenhorn, 1/6).
The Associated Press: "House Democrats want to raise income taxes on high-income individuals instead but recognize that they will have to bend on that and other issues so that Senate majority leader Harry Reid can maintain his fragile 60-vote majority support for the bill. ... The House wants to increase income taxes on individuals making more than $500,000 and couples over $1 million, which would raise $460 billion over 10 years to pay for the bill. The Senate wants to tax insurance companies on plans valued at over $8,500 for individuals and $23,000 for couples, raising $150 billion. ... In the end the House likely will have to accept the insurance plan tax at some level - say starting with plans valued at $25,000 or more, with carve-outs for certain union professions - but it might not happen without a fight" (Werner, 1/7).
The Washington Post reports that "skeptics continue to raise questions about who would be hit hardest and whether health-care spending would be limited as much as proponents say" if the tax is implemented. "Health analysts recently questioned the assumption that the tax would target only the most lavish insurance packages, nicknamed 'Cadillac plans.' The analysts, writing in the journal Health Affairs, found that some less-generous plans could be taxed because they are costly for other reasons. The location of an employer and the type of industry, for example, have as much to do with the cost of plans as the generosity of the benefits and the kind of plan. Smaller businesses, especially those with a preponderance of older workers, tend to have higher premiums, as do certain industries, including the health-care sector" (MacGillis, 12/7).
Los Angeles Times: "Wednesday's meeting, the second in two days, was part of a White House effort to take a more active role in healthcare negotiations as they reach their final stage.
A Senate aide who requested anonymity because he was not authorized to discuss the closed-door meetings said that the White House had signaled it would 'convene and run' meetings from now on as lawmakers strive to reach a consensus, reflecting a 'significant uptick' in the Obama administration's involvement. The Democratic leadership welcomes a more hands-on White House, as Obama's imprimatur could provide political cover to members casting a tough vote in an election year" (Nicholas, 1/7).