Tax on High-Value Health Plans Gains Momentum

Round Rock, TX (PressExposure) January 12, 2010 -- Tax on High-Value Health Plans Gains Momentum After Obama Speech By Brett Ferguson and Heather M. Rothman

Senate Finance Committee Chairman Max Baucus’s (D-Mont.) proposal to impose an excise tax on high-value health insurance plans gained momentum Sept. 10 after President Obama endorsed the concept in a speech to the nation.

Obama, speaking to a joint session of Congress Sept. 9, said he wants to see a $900 billion health care reform bill that would be paid for largely through health-related spending cuts and new fees and taxes on the health care industry.

The president specifically mentioned a plan under discussion with Finance Committee negotiators that would impose a 35 percent excise tax on insurance companies and insurance administrators for any health insurance plan that is valued at more than $8,000 for individuals and $21,000 for families.

While Obama referred to the plan as being paid for with a “fee,” Baucus said the president was clearly alluding to the excise tax and other provisions he has offered the Finance Committee.

Obama’s plan was “uncannily similar to what we’re working on,” Baucus told reporters after a meeting with the “Gang of Six” bipartisan Finance Committee negotiators. “The final price tag is what we’re shooting for. The pay-fors are very similar to what we’ve proposed … It’s basically our plan,” Baucus said.

The House Ways and Means Committee passed a completely different plan to offset the costs of its health care reform bill (H.R. 3200) that relied on a surtax for households earning more than $350,000 per year.

Rangel to Consider Excise Tax

House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) told reporters Sept. 10 he was surprised that Obama discussed using the excise tax on insurance policies, but is willing to consider anything that would facilitate House passage.

Rangel said the change will not be in the House bill when it comes to the floor, but, “I want to make certain that there’s no requests that are being made that would enhance the passage of the bill that [are] going to be ignored.”

The House Democratic leadership is examining the bills approved by Rangel’s committee and the Energy and Commerce and the Education and Labor committees, and trying to craft one package that can secure the 218 votes needed for House passage.

Despite the similarities between the proposal before the Finance Committee and the plan laid out by Obama, Rangel remained uncertain of what a final bill in Congress would contain.

“I refuse to speculate on what the Senate Finance Committee has done because I don’t believe they know what the hell they have done. It is so fluid over there I can’t spend time thinking. … I have my hands full with my caucus without thinking about what they’re doing,” Rangel said. “I cannot say any more, except I’m willing and have to consider anything that will expedite 218.”

Aside from mentioning the excise “fee,” Obama used most of his speech to call on lawmakers to stop bickering and deliver health care reform that can stem rising health care costs, provide security and stability to those who have insurance, and provide insurance to millions more Americans.

The president said his plan would require individuals to have basic health insurance and would require employers either to offer their workers health care or “chip in to help cover the cost of their workers,” with 95 percent of all small businesses exempt from these requirements.

“Much of the rest,” he said, would be paid for with revenues from pharmaceutical and insurance companies, including charging insurance companies a “fee” for expensive policies. Speaking in favor of a new government insurance exchange, Obama said some individuals and small businesses unable to afford some of the insurance plans offered within the exchange would receive tax credits based on need, although he did not provide any details.

Senate Majority Leader Harry Reid (D-Nev.) said Sept. 10 that Obama’s speech clearly showed that it is up to Republicans now to decide how much they would like to participate in the health care debate.

“There are Republicans out there willing to help us. If there aren’t, we can always go the route of reconciliation, but that’s a second choice,” Reid said, referred to a procedural move that would allow budget-related parts of the health care bill to be passed with only 51 votes, instead of the usual 60 votes needed to avoid filibusters in the Senate.

Republicans React

Republicans noted that Obama has made more than two dozen national speeches on health care and said Americans do not have a problem with the “sales pitch,” but with the product.

Sen. Charles Grassley (R-Iowa), ranking member of the Senate Finance Committee and one of the five senators negotiating with Baucus on the bill, said in a statement issued after Obama’s speech that it was the president who “passed up a big opportunity” by not ruling out the “public option” health plan.

On the House side, Minority Leader John Boehner (R-Ohio) criticized the House health care plan. He said the Congressional Budget Office already has determined that the legislation would be ineffective at lowering health care costs and would actually increase the federal budget deficit dramatically over the long term.

The House bill adds about $240 billion to the deficit in the first 10 years, and that number increases in later decades, Boehner said.

Bill Possible Before Thanksgiving?

In spite of the continuing criticism from Republicans, Vice President Joseph Biden predicted on morning television shows Sept. 10 that the health care bill could be completed before the end of November.

Reid also said he hopes a bill can be accomplished “well before Thanksgiving” and said he is encouraged now that Baucus has set a schedule for the Finance Committee to mark up its bill during the week of Sept. 21.

House Speaker Nancy Pelosi (D-Calif.) said there is no timetable for bringing the health care bill to the floor other than getting Obama something that he could sign in 2009. She said, “When we are ready, we will take the bill to the floor.” She pointed out, however, that House members are waiting to see the Senate Finance Committee product.

“From what we’ve heard of it, there are many good things that are consistent with what we have in our bills and some things where there are areas of disagreement,” Pelosi said. “But that’s the legislative process. I don’t want to say disagreements, they’re just different proposals, and we’ll see how we resolve the different pieces of legislation.”

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Press Release Submitted On: January 12, 2010 at 8:37 am
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