Middle-class taxes deal breakers on health plan
By: Susan Ferrechio
Chief Congressional Correspondent
September 22, 2009
After an uproar over the projected costs and increased deficits from health care legislation, Democrats are considering taxing middle-class Americans who don't have health insurance and taxing some health coverage to pay for a plan.
But while more fiscally responsible, the ideas are proving no more popular.
The disagreement could come to a head this week, when the Senate Finance Committee begins drafting the bill under the leadership of it's author, panel Chairman Max Baucus, D-Mont.
Baucus announced he would cut some of the taxes in his bill and increase subsidies using about $28 billion in savings the Congressional Budget Office estimates his bill would save.
It may take much more than that to appease his own party, however.
If ever there was a strong indication that Democrats don't like Baucus' health care proposal, it came in the form of hundreds of amendments that lawmakers hope to use as a way of rewriting the bill, which Baucus and a bipartisan group of five senators crafted during more than 100 hours of meetings.
"It's a classic case of too many cooks in the kitchen," one committee aide said.
Beginning on Tuesday, members of the Senate Finance Committee will try to add more than 500 amendments to the latest Democratic health proposal. Here is a sample.» Sen. Jay Rockefeller, D-W.Va.: Would add a strong public health insurance option to compete directly with private plans.
» Olympia Snowe, R-Maine: A public option would be provided in any state where affordable insurance was not available to 95 percent of state residents. » Sens. Mike Crapo, R-Idaho, and Pat Roberts, R-Kan.: Would prohibit any expansion of Medicaid that would result in additional costs to the states, now or in the future. » Sen. Debbie Stabenow, D-Mich.: Would exempt retirees from the excise tax on health insurance plans. » Sen. John Ensign, R-Nev.: Would regulate lawsuits for health care liability claims related to emergency room services.
Many Democratic senators have offered amendments that would alter or get rid of a plan in the Baucus bill to tax insurance companies that provide "luxury" plans, which Baucus says he will reduce by an unspecified amount.
Sen. Jay Rockefeller, D-W.Va., for instance, wants to carve out an exception for high-risk professions, including the coal miners in his state. But the insurance tax would raise $215 billion, which Baucus wants to spend on insurance subsidies and making Medicaid available to anyone earning up to 133 percent of the federal poverty level, or $29,300 for a family of four.
Other senators want to strike a provision that would impose a tax on people who do not enroll in an insurance plan. But that would kill a $20 billion revenue source.
Finance Committee Democrats are offering other alternatives to raise revenues, such as closing corporate tax loopholes. Rockefeller proposes capping itemized deductions for upper-income taxpayers at 35 percent. But that plan has already been floated in the Senate and many Democrats say they don't like it, in part because it would hurt charitable donations. In April, the Senate voted to reject a plan by President Obama to cap at 28 percent the size of itemized deductions by those earning more than $250,000.
And it is unlikely that Senate will look for revenue-raising solutions in the House, where Democrats propose paying for their $1 trillion bill with a "health tax surcharge" that they can double of they don't find ways to reduce Medicare costs. That plan is all but dead on arrival in the Senate.
"There will be controversy surrounding any financing choice," said Jonathan Oberlander, a health policy professor at the University of North Carolina at Chapel Hill. "There is no politically easy way to do this, especially given broader concerns about federal spending and the budget deficit."
