House Dems eye tax on insurance firms

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By Jennifer Haberkorn and Kara Rowland

Having all but rejected the idea of taxing so-called Cadillac insurance plans to pay for health care reform, House Democratic leaders are considering a new windfall tax on insurance company profits as they prepare a bill for the House floor.

Revenue is likely to be one of the most significant differences between the House and Senate plans that will eventually need to be hammered out before a bill could make it to the president's desk. House leaders are also preparing multiple versions of another hotly contested issue: the public option.

The Senate plan will likely take a significant step forward Tuesday, when the Finance Committee hopes to take a final vote on its bill and send it along to Majority Leader Harry Reid to combine it with a bill from the Health, Education, Labor and Pensions Committee (HELP).

To that end, President Obama reached out to Sen. Olympia J. Snowe on Thursday, "fishing" for her commitment to vote for the plan, she joked with reporters staking her out at the entrance to the Senate floor. Ms. Snowe, of Maine, is the only Republican who hasn't ruled out voting for the bill.

The Finance Committee plan includes a new 35 percent tax on insurance plans valued at more than $8,000 for individuals and $21,000 for families. The Congressional Budget Office determined the tax would raise $201 billion in the next 10 years.

House Democrats say the Senate tax would unfairly hit middle-class Americans, particularly union members and small business owners.

House Speaker Nancy Pelosi, California Democrat, said the House Ways and Means Committee is looking at the profits-tax idea, but warned it's "very preliminary."

"I believe that all of the participants, whether it is insurance companies or the pharmaceutical industry, have much more they can put on the table to help reduce cost and take us in a downward direction in terms of spending on this health care bill," she said.

Mrs. Pelosi said health care legislation, which is expected to make it to the House floor in late October, would create nearly 50 million new taxpayer-subsidized customers for insurance companies.

Lawmakers declined to discuss any additional details of the tax, such as how much it would raise or at what rate it would be collected. But the idea was popular with rank-and-file Democrats at a caucus meeting on Thursday, said Rep. Gerald E. Connolly, Virginia Democrat.

"The pharmaceutical and hospital industries are putting money on the table," he said, pointing to offers those industries have made to help cut health care costs. "The insurance industry is conspicuous by its absence ... What are they going to put on the table to bring down costs?"

The other most contentious issue between the House and Senate could be the "public option," a measure to create a government-run insurance plan that is strongly supported in the House but doesn't have as much support in the Senate. The Finance Committee rejected a public option in a vote last week, though the bill that passed the HELP panel does include one.

The House is sending multiple versions of a public option to the Congressional Budget Office for a cost analysis. After that has been done, Democratic leaders will decide which of the bills to bring to the House floor for a vote, Mrs. Pelosi told reporters.

Mrs. Pelosi said she supports the "robust public option," but conceded it's unclear whether there are enough votes in her chamber to pass the proposal.

"It is very close," she said.

The version she favors would reimburse doctors based on Medicare rates plus 5 percent. It's favored by liberal Democrats but strongly opposed by conservative Democrats from rural districts, where Medicare reimbursement rates are low. They support a plan that would let the federal government and health care provider negotiate new rates.