Legislators Revisit Tax on Health Benefits

By DAVID ESPO

posted: 144 DAYS 14 HOURS AGO

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WASHINGTON (July 7) - The White House and Democratic congressional leaders struggled to build momentum for health care legislation on Tuesday in the face of concerns about the pace of bipartisan talks in the Senate as well as apprehension among moderate Democrats in the House.

Officials said a deal was pending with the nation's hospitals to give up about $155 billion in government payments over the next decade, money that then could be used to expand health care to millions who lack it. An announcement was possible as early as Wednesday.

At the same time, one lawmaker deeply involved in bipartisan negotiations in the Senate indicated there were second thoughts about a proposed new tax on the costliest employer-paid insurance benefits.

"It's clearly a very difficult issue. ... You go to the public to ask them what they think and they don't like it," said Sen. Kent Conrad, D-N.D., referring to recent polling. A compilation of four recent polls reviewed at the session showed at least 59 percent of the public opposed to taxing health care benefits to "pay for reform," and as many as 70 percent.

As a result, Conrad said, "we're looking at other options" to help finance a bill whose price tag is expected to reach $1 trillion or slightly more. He did not identify any.

In a sign of higher-level concern over the pace of bipartisan talks, Senate Majority Leader Harry Reid told reporters he intends to meet Wednesday with a small group of Republicans who have been involved in the discussions. While Democrats and the White House have said they would prefer a bipartisan bill, they also must be careful not to let the talks drag on so long that they fall hopelessly behind schedule.

There were similar efforts under way in the House, where White House chief of staff Rahm Emanuel arranged to attend a closed-door meeting of the Democratic rank and file, and Democratic leaders reviewed possible tax increases and spending cuts to pay for their version of the bill. And a similar set of challenges, too, including balky moderates who could face difficult re-election prospects next year.

It was unclear whether these and other difficulties were enough to imperil Obama's objective of signing a health care bill this fall, or whether they were merely the type of obstacles that emerge any time Congress attempts to pass major legislation.

The developments occurred as Congress returned from a weeklong vacation to find health care the top item on its agenda for the month of July. House Speaker Nancy Pelosi has set a target of month's end to enact health care legislation, while in the Senate, Reid hopes to complete legislation by the end of the first week in August.

At its core, the effort as outlined by Obama is designed to achieve twin purposes: expand health insurance to an estimated 50 million who now lack it, and reduce the explosive growth in health care generally.

Any bill is expected to require insurance companies to issue a policy, without the ability either to deny coverage or charge higher premiums on the basis of preexisting medical conditions.

In the House, government subsidies for private Medicare plans were on the chopping block as Democratic leaders reviewed their options, as was a variety of other proposed trims in Medicare and Medicaid, the federal health care programs for seniors and the poor.

A long menu of possible tax increases was also in circulation, including one that would fall on the upper-income. Officials said a proposed hike in the Medicare payroll tax had lost favor in recent days. If included in the bill, it would violate Obama's campaign pledge not to raise taxes on the middle class.

Separately, numerous officials said moderate to conservative Democrats were unhappy that the legislation was likely to include an option for the government to sell insurance in direct competition with private companies.

Several of these rebellious lawmakers prefer giving private companies exclusive rights to sell insurance, with the government entering the market place only if consumers don't have enough choice in the coverage available to them.

With millions more Americans covered by insurance, the White House and Sen. Max Baucus, the chairman of the Senate Finance Committee, have been negotiating with numerous outside groups in search of at least half of the money needed to finance the expansion in care.

A deal with the drug companies marked their first achievement, and a deal with hospitals would give them leverage as they seek similar deals with groups representing doctors and insurance companies.

Baucus has long championed a tax on health benefits as the best way to pay for health care while simultaneously restraining the growth of the cost in coverage in the future. Republicans, too, have been supportive, but the plan has drawn strong opposition from organized labor. House Democrats have been highly resistant, and Obama campaigned hard against it in last year's run for the White House.

After meeting with Baucus on Tuesday, a key Republican said it would be difficult to put a deal together without the benefits tax.

"The extent to which that's not on the table, it leaves a great big hole in what we're trying to do and to fill that hole is very, very difficult," said Sen. Chuck Grassley, R-Iowa.

Separately, the administration threw its support behind creation of a program to help families struggling with burdensome costs of long-term care.

The voluntary insurance program, sponsored by Sen. Edward M. Kennedy, D-Mass., would pay a modest daily cash benefit of at least $50 that people could use for a range of in-home services or nursing home expenses. While the committee that Kennedy chairs is expected to include the provision in its overhaul health care bill, the Congressional Budget Office has warned that premiums won't be enough to cover benefit costs after only a few years.

Republicans said that over the next 75 years, it could eventually cost $2 trillion.

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Associated Press writers Erica Werner and Ricardo Alonso-Zaldivar contributed to this report.

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2009-07-07 18:32:19