- The Washington Times - Tuesday, May 19, 2009

Taxing employee health insurance benefits, soda and alcohol are among several options Congress is considering to help pay for a proposed overhaul of the nation’s health care system.

The Senate Finance Committee released a 40-page report Monday designed to raise money through tax increases and other revenue-generating options to help pay for covering the 50 million Americans without medical insurance. Senators will meet behind closed doors Wednesday to debate the options.

No dollar amounts were included on how much the proposals would raise, and all face strong opposition from the industries affected.

One of the most controversial money-generating options the committee proposed is to tax employer-sponsored health insurance above certain limits - a stance opposed by business and union leaders, and at odds with many Democrats.

Tax-exempt limits could be based on the value of the plan, the income of the insured or a combination of both, according to the committee plan. The limit also could be tied to a percentage of the value of the employer-provided health coverage.

Another option would be to tax employee health insurance of those earning more than $200,000, or $400,000 for couples.

Health insurance provided by employers is not now subject to taxation.

The idea of employer-based health care has splintered the debate over health care reform across the political spectrum. During the presidential campaign, Sen. Barack Obama supported preserving the employer-based model and criticized his Republican rival, Sen. John McCain of Arizona, for calling to tax employer-based health care.

The Finance Committee also is considering a uniform tax for some alcoholic drinks based on its alcohol content. One suggestion is a tax of $16 per proof gallon. Current law gives many domestic alcohol producers tax credits on the first few hundreds of thousands of gallons produced annually.

Another idea floated by the committee is an excise tax on soft drinks. The tax would not apply to beverages sweetened with noncaloric sweeteners.

Mr. Obama has made expanding health care coverage one of his top priorities for this year. But he is intent on avoiding the mistakes that doomed President Clinton’s attempt at health care reform, and one key goal is to let Congress play a greater role in drafting legislation as opposed to the 1993 versions, which was penned in large part from the White House.

But the committee’s proposed tax hikes, marshaled by Committee Chairman Max Baucus, Montana Democrat, are expected to receive some pushback from some Democrats eager to shed their party’s tax-and-spend label.

As president, Mr. Obama has already called for taxing wealthier Americans to help fund a health care overhaul that could cost more than $1.5 trillion. He has suggested reducing tax deductions - including those for mortgage interest and charitable donation - for individuals making more than $200,000 and couples making more than $250,000.

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