Democrats shy away from health care tax

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By Jennifer Haberkorn

Cracks in President Obama's health care reform plan formed Wednesday as his August deadline appears to be slipping away amid angst from Democrats over taxing employer benefits to help pay for the $1 trillion makeover.

Top Democrats, including Sen. Christopher J. Dodd of Connecticut, who is helping craft the measure, and Sen. Charles E. Schumer of New York said the idea isn't politically viable.

"Fifty-three percent of my constituents would be taxed under that proposal in Connecticut," said Mr. Dodd, who is acting chairman of the Senate Health, Education, Labor and Pensions Committee.

"And I'm not alone. There's a lot of states where the numbers are that high and I suspect an awful lot of Republicans would be against that proposal as well - not just Democrats. So we're going to have to find another option."

But Finance Committee Chairman Max Baucus, Montana Democrat, said the concept is still on the table. Sen. Kent Conrad, North Dakota Democrat, said all options are still being considered. Those include taxing the most expensive health care plans - those valued at more than $25,000 - or sugary drinks or the highest income brackets. He said nothing has been even close to finalized besides cuts to Medicare and Medicaid.

The bill is likely to total about $1 trillion, and committee members are still looking to cull about $320 billion in politically viable payment methods.

The White House did get some help with the bills price tag Wednesday. Four hospital associations said they will forgo $155 billion in Medicare and Medicaid payments over the next decade.

Vice President Joseph R. Biden Jr. announced the deal with the American Hospital Association, the Community Health Systems, the Catholic Health Association and the Federation of American Hospitals.

"Our hospitals are cracking under the weight of providing quality health care," Mr. Biden said. "The status quo is simply unacceptable."

Republicans accused Democrats of bullying industry groups into cutting the deals "to fund a government takeover of health care."

"That will increase costs and force millions of Americans out of the health care that they currently have," said House Minority Leader John A. Boehner, Ohio Republican.

The Congressional Budget Office has said that a similar proposal from drug manufacturers was hard to measure, putting a damper on such industry pledges.

Meanwhile, Senate Majority Leader Harry Reid, Nevada Democrat, told Republicans that talks in the Finance Committee should continue without a hard deadline, said three Republican senators at the meeting. Mr. Obama has said that a reform bill must pass Congress by the August recess or it won't happen at all.

"Bipartisan talks are going to continue and not continue under a very hard timeline and I think that's very good progress," Sen. Charles E. Grassley, ranking Republican on the Finance Committee, said after the meeting.

Mr. Reid's spokesman, Jim Manley, later said that Mr. Reid's goal is still to pass a bill by the August recess.

Mr. Baucus, whose pending bill has the best chance at bipartisanship, has repeatedly told reporters "we'll be ready when we're ready" as he tries to craft a plan, refusing to set a new deadline. He said Wednesday that he's still confident the committee will pass a bipartisan measure.

Finding money for reform remains a major obstacle.

Republicans traditionally have favored the idea of removing tax breaks for employers that offer insurance plans. They have introduced legislation that would instead give the tax break to Americans to buy their own insurance.

Sen. Olympia J. Snowe, a Maine Republican who has been negotiating with Democrats, said she doesn't expect the tax to be included in a bill.

During the presidential campaign, Mr. Obama criticized his Republican opponent, Sen. John McCain, for proposing the idea. Since then, Mr. Baucus told reporters that the president hasn't pushed the idea off the table.