House May Tax Payrolls, Drop Wealth Levy to Finance Health Plan
House May Tax Payrolls, Drop Wealth Levy to Finance Health Plan
January 8, 2009
By: James Rowley and Ryan Donmoyer
U.S. House lawmakers may agree to pay for the nation's health-care overhaul by adopting versions of Senate proposals to raise Medicare payroll taxes and tax health benefits for the first time, Democratic aides said.
House May Tax Payrolls, Drop Wealth Levy to Finance Health Plan
January 8, 2009
By: James Rowley and Ryan Donmoyer
U.S. House lawmakers may agree to pay for the nation's health-careoverhaul by adopting versions of Senate proposals to raise Medicarepayroll taxes and tax health benefits for the first time, Democraticaides said.
Financing the expansion of insurance coverage to more than 90 percent of Americans looms as the largest issue facing Congress. House Speaker Nancy Pelosi, seeking to merge her bill with Senate legislation, yesterday briefed the Democratic caucus on party leaders' discussions during a conference call.
The talks are at a preliminary stage until the Senate returns later this month, and House Ways and Means Committee Chairman Charles Rangel predicted "tough" negotiations. Some House members are vowing to put up a fight over the legislation, which is estimated to cost about $1 trillion over 10 years.
"There's a gap between us and the Senate and, I guess, the White House on how to pay for health-care reform," said Representative Joe Courtney of Connecticut, who leads a group of 190 House Democrats opposed to the Senate proposal to levy an excise tax on the most-expensive insurance plans.
President Barack Obama this week urged House leaders to drop their opposition to that tax, a Democratic aide said. The tax has drawn protests from labor unions, which are among the Democratic Party's biggest backers.
Scale It Back
At the least, the tax on health benefits would have to be revamped by raising the value of the plans to which it would apply and adjusting how it's indexed for inflation, Courtney said.
The Senate measure would impose a 40 percent excise tax on employer-provided insurance plans worth more than $8,500 for individuals and $23,000 for families.
That would raise $149 billion, according to the Congressional Budget Office. Changes may include raising the minimum value of plans subject to taxation and lowering the rate, aides said.
The excise tax "is obviously on the list of issues for continued discussion" among House Democrats, Connecticut Democrat Rosa DeLauro, a member of Pelosi's leadership circle, told reporters after the teleconference. Lawmakers are "hearing from their constituents about that issue," she said.
Nationwide Exchange
During the call, Pelosi and fellow Democrats said they would press for the House proposal for a nationwide insurance exchange, on which eligible Americans could buy coverage from private companies at lower costs, Colorado Democrat Diana DeGette said in a telephone interview. The Senate measure would set up exchanges in each of the 50 states, which could choose instead to buy insurance coverage for low-income residents.
"We just don't see how you can get cost-containment if you have a patchwork state-by-state system that states can opt out of," DeGette said. House leaders "are not giving in to this idea that we're going to just have to accept" the Senate version, she said.
Should House members agree to drop their proposed surtax on high-income Americans, that would leave a funding gap. The measure, which would impose an additional 5.4 percent levy on people with incomes of at least $500,000 and couples earning more than $1 million, would raise $460.5 billion over 10 years.
To make up the lost revenue, negotiators are considering boosting the Medicare payroll tax increase beyond the 0.9 percent contained in the Senate legislation.
The Senate tax would apply to individuals earning at least $200,000 and joint filers earning at least $250,000. Negotiators are considering applying any expansion of the increase to a higher income group, the aides said.
As proposed in the Senate legislation, the Medicare payroll tax would raise $88 billion, according to the Congressional Budget Office.