- The Washington Times - Saturday, September 26, 2009

House Democrats are considering an insurance tax to help pay for their health care overhaul plan, even though such a funding possibility is bitterly opposed by labor unions that are among the party’s most loyal constituencies.

House Speaker Nancy Pelosi said Friday a tax on high-cost health insurance plans is “under consideration” as Democrats search for consensus within their ranks before taking a bill to the House floor later this fall.

“We just have to see how much money we need for what,” the California Democrat said. “And if we’re taking the bill down in cost, there are other provisions in the Senate bill that bend the [costs] curve that might be more palatable. We’ll see.”

Mrs. Pelosi didn’t specify what other provisions she might find more acceptable. An aide said that if the House does incorporate an insurance tax in its plan, it would probably be a more modest one than what Senate Finance Committee Chairman Max Baucus, Montana Democrat, has proposed.

The House Democratic plan calls for raising income taxes on upper-income people to pay for covering the uninsured. Mr. Baucus has instead proposed a tax on high-cost insurance plans worth more than $8,000 for an individual policy and $21,000 for family coverage.

Proponents of the insurance tax, which President Obama has endorsed, say it would help to lower health care costs by encouraging people to become more cost-conscious health care consumers.

Some of the high-cost plans are expensive because they come with no co-payments or deductibles, and cover every dollar spent for health care. Not all of them provide such “Cadillac” benefits, however. Some are very expensive because they are sold to companies with older employees, or workers in high-risk occupations.

Unions say they’ve given up higher pay to secure better health care benefits that they are determined to keep. Insurers are likely to try to pass on the cost of the tax through higher premiums.

If House Democrats adopt the insurance tax, it may help them to reduce the income tax increase that they’ve proposed.

Paying for their plan is only one of several difficult issues House leaders are trying to hash out as they struggle to merge three committee-approved bills into a single piece of legislation. They hope to finish that process next week.

House Democrats are struggling to get their 10-year, $1 trillion-plus bill down to the $900 billion price tag Mr. Obama prefers. Major cuts could be required, but Democrats want to protect the subsidies their plan offers to low-income Americans to help them buy coverage. Those subsidies are the most costly part of the bill.

Meanwhile, Mr. Baucus’ Finance Committee adjourned Friday without coming close to finishing its health care bill, even though that had been his goal when he convened the session on Tuesday. Hundreds of amendments and contentious debates over issues large and small, often initiated by Republicans, have slowed progress. The panel will resume work on Tuesday. It’s the last of five committees in Congress to act on health care legislation.

At their core, all the health care overhaul bills are designed to extend health insurance coverage to millions of people who lack it, employing a new system of federal subsidies for lower-income individuals and families and establishing an insurance exchange in which coverage would have federally guaranteed benefits. Insurance companies would be prohibited from refusing to sell insurance based on an individual’s health history, and limits would be imposed on higher premiums based on age.

Not yet determined is whether final legislation would contain any version of a proposed public plan to compete with private insurers and sign up middle-class workers and their families.

The Senate panel’s bill does not include a government-run option, and the conservative-leaning committee is preparing for a showdown on the issue next week.

Although all the House bills include some version of a public plan, there’s no final decision on how it would be structured. House liberals are pushing for provider payment rates tied to Medicare rates but 5 percent higher, but moderates say those rates are too low and would hurt struggling hospitals and other providers. Moderates would give the secretary of the Health and Human Services Department the ability to negotiate rates instead.

Energy and Commerce Committee Chairman Henry Waxman, California Democrat, said Friday that the Medicare rate structures saves about $85 billion more over 10 years than the negotiated rate structure.

“That means we have to come up with the money to do that,” Mr. Waxman said.

A complicated dispute over how to address regional disparities in Medicare payment rates also continued to be a major sticking point for House Democrats.

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