Tax on health coverage lurks in Senate committee

WASHINGTON — Legislation to be outlined next week in the Senate Finance Committee would likely include a new tax on workers with the costliest employer-provided health coverage, officials said Friday, but with implementation delayed until 2013 to minimize any political fallout.

Officials familiar with internal deliberations said the leading option under consideration by Sen. Max Baucus, D-Mont., the committee chairman, would mean higher taxes for workers whose family coverage costs $15,000 a year or more in premiums paid by employer and employee combined.

The provision could generate hundreds of billions of dollars over the next decade to help pay the $1 trillion or more the Obama administration has estimated is necessary under its plan to extend health care to millions of Americans who lack it. Cuts in projected Medicare and Medicaid spending are expected to make up much of the rest.

Officials cautioned that details of the proposal could change in the days before Baucus unveils his long-awaited outline. The Finance Committee and several other panels are expected to draft legislation this month, and Democratic leaders have vowed to pass bills in both houses before Congress begins its annual August break. Their objective is to forge a final compromise this fall.

President Barack Obama campaigned against taxing health benefits before last year's election, attacking Republican Sen. John McCain in television advertising when McCain proposed it.

But now, Baucus has told reporters, the president appears open to the idea. Another Democratic senator who attended a recent meeting with Obama said the president did not object when the issue was raised, saying he preferred an alternative he outlined last winter. A 2013 effective date would allow Obama to run for re-election before its effect is felt.

The senator spoke on condition of anonymity to avoid discussing a closed-door meeting at the White House, and officials who described the emerging legislation said they, too, were barred from publicly describing closed-door deliberations.

The drive to find $1 trillion or more in health care financing is one of a handful of particularly contentious issues confronting lawmakers and the White House, along with issues surrounding proposed requirements for individuals to purchase coverage or employers to provide it.

The thorniest issue of all may be a deadlock between Democrats, most of whom want a government-run insurance option, and Republicans, mostly adamantly opposed to the idea. Key lawmakers in both parties are studying a compromise for nonprofit cooperatives to offer insurance in competition with private companies.

Tax on health coverage lurks in Senate committee 06/12/09 [Last modified: Friday, June 12, 2009 10:26pm]

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