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THE PROGRESSIVE REVIEW - January 18, 2010
Lawmakers Agree to Scale Back Tax on Health Plans
by: David Lightman and Margaret Talev
McClatchy Newspapers
Washington - The White House, congressional leaders and
union officials on Thursday announced a tentative agree-
ment in their health care negotiations, to pare back a
proposed excise tax on high-end insurance policies for
middle-class workers.
The compromise could break a deadlock in the health care
debate ? if enough lawmakers agree to it. Many details
were unresolved, however ? everything from how much the
pared back tax would cost, to how a government health
care exchange that collective bargaining units and
employers might buy into over time would be structured.
Lawmakers hoped to finish negotiating an overhaul plan
this weekend.
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They agreed Thursday to significantly alter the original
40 percent tax contained in legislation the Senate passed
Dec. 24 that would tax policies that cost more than $8,500
for individuals and $23,000 for families.
Under the agreement, the threshold for taxation would be
adjusted based on companies' or unions' relative age,
gender and ratio of workers in high-risk jobs. Dental and
vision coverage would be exempt.
It also would give collective bargaining units a five-year
delay before they're subject to the excise tax. Over time,
more Americans could get their insurance through a govern-
ment-managed private insurance exchange, especially if they
live in states with high insurance costs or participate in
collective bargaining units.
The aim, as union bosses see it, is to tax high-end health
insurance plans carried by wealthy business executives
while shielding middle-class workers who bargained away
their salaries in exchange for high-end health-care
coverage.
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Details, though, were sketchy. No firm cost estimate was
available. The Senate plan would have raised an estimated
$149 billion over 10 years.
Nor was it clear how they'd find the lost revenue.
President Barack Obama has insisted on a plan that doesn't
increase deficits over a 10 years period; the Senate bill
would cut deficits an estimated $132 billion.
House of Representatives leaders suggested that they could
make further increases in the Medicare tax, now 1.45
percent. The Senate would boost that by 0.9 percentage
points for individuals who make more than $200,000 and
joint filers who make more than $250,000. House leaders
are considering a bigger increase.
Some other key differences between the House and Senate
version of health care legislation also remain unresolved,
including abortion funding, a government-run health care
plan and whether health exchanges, or marketplaces where
consumers can shop for coverage, will operate largely on
a state or national basis.
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The House agreed to a government-run public option that
would compete with the private sector, while the Senate
prefers a federally-supervised system of multi-state,
privately-run companies.
The tax issue is thus far the lone major breakthrough, as
Obama and Democratic leaders were willing to pivot at the
urging of one of their biggest bases, organized labor,
even if it meant slowing the rate at which the plan the
plan might ostensibly pay for itself.
"The president's pleased with this agreement," said White
House communications director Dan Pfeiffer. "He was very
clear that we cannot do health care on the backs of the
middle class, and I think this agreement achieves that."
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