by Greg Hitt and Naftali Bendavid, The Wall Street Jornal, www.wsj.com

WASHINGTON — Senior House Democrats, seeking a health bill acceptable to rank-and-file lawmakers, are warming to a plan to tax insurers that sell high-end health policies.

So far the idea has attracted more support in the Senate, where the Finance Committee is weighing a proposed levy on insurance companies offering individual plans valued at more than a certain limit, likely $25,000 or higher. The insurers would have to pay an excise tax on such policies, and the cost would likely be passed on to employers. While the structure isn’t clear, the tax would likely fall on the portion of any policy exceeding the mandated limit.
Adding the proposed tax — which would raise as much as $180 billion over ten years, according to people familiar with the plan — would allow the House to shrink the direct surtax on wealthy households included in the current version of its bill. That might widen support among wary Democrats.

Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, said taxing insurers “is the wrong approach at the wrong time. New taxes on health-care coverage will make coverage less affordable.”

Senate Finance Chairman Max Baucus (D., Mont.) struggled Tuesday to nail down final details of a bipartisan bill that could come with a 10-year price tag below the roughly $1 trillion bill envisioned in the House.

While no deal is in hand, some central points of the Baucus bill, which has been negotiated with three committee Republicans, are becoming clear. In addition to taxing high-value health policies, the legislation would expand coverage by creating a network of nonprofit cooperatives.

Unlike a bill that has passed two committees in the House, it wouldn’t mandate that companies provide coverage to their workers. But it would require companies to pick up at least part of the cost of government subsidies if employees wind up needing them, said people familiar with Senate negotiations.

These people said the talks have moved into a new phase, in which would-be Republican supporters are weighing whether to sign on publicly. In return, Republicans are looking for President Barack Obama to provide cover by speaking in support of the bipartisan package. They also want assurance from Senate Democratic leaders that Republican priorities will be protected as the measure moves forward.

Timeline: Health-Care Reform
While not giving details, Mr. Baucus said he hoped to produce a bill in the “not too distant future.”
The Finance Committee deliberations are being closely watched in the House, where Democratic leaders struggled Tuesday to help the House Energy and Commerce Committee resume deliberations on the bill. White House Chief of Staff Rahm Emanuel led negotiations in the House speaker’s office with moderate Democrats who have stalled action. But it was unclear when the panel would reconvene.

So far, the House hasn’t prepared its own proposal to tax health plans. But House Majority Leader Steny Hoyer (D., Md.) said Tuesday that taxing the most generous health policies would be a “reasonable alternative that I think is good health-care policy and good tax policy.” He added that “it’s gold-plated…nobody is talking about taxing average family benefits.”

In a separate interview, House Majority Whip James Clyburn (D., S.C.) said he has never been a fan of the surtax, and suggested taxing high-end health plans “would be a better way.” He added, “I know there are some people who have problems with that, but, hell, those people aren’t going to be for anything we do.”

In addition to raising revenue, many health-care experts say such a tax could help curb long-term health costs, by creating a disincentive for plans that encourage unnecessary tests and procedures. Maine Sen. Olympia Snowe, one of three Republicans Sen. Baucus hopes will buy into a bipartisan package, said she was supportive of the idea, and made clear the proposal was “on the table.”
The money raised by the tax would help provide support for lower-income Americans to buy coverage. Some 71% of Americans employed by private industry had access to employer-sponsored health benefits in March 2009. But just a quarter of the lowest wage earners — those whose hourly wages put them in the bottom 10% — had such access, the Bureau of Labor

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This entry was posted by Adam V. Russo on Friday, July 31st, 2009 at 9:50 am and is filed under Health Care Legislation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.