Tentative Tax Deal Marks Health Care Breakthrough
From Associated Press (January 15, 2010)
WASHINGTON_In a major breakthrough, union leaders bowed Thursday to
White House demands for a new tax on high-cost insurance plans as
part of landmark health care legislation taking final shape in
intensive negotiations. "We are on the doorstep" of success,
President Barack Obama said.
The tentative agreement on the tax, which included significant
concessions by the administration, was disclosed as leading
lawmakers set an informal timetable of Friday for a compromise on
the health care bill that Obama made a top priority in taking
office a year ago.
Democrats expressed the hope that the agreement would quickly open
the way for progress on other key issues where House and
Senate-passed bills differ, as well as attempts by the White House
to squeeze additional financial concessions from drug makers,
nursing homes and other health care providers.
On a separate issue, makers of generic drugs, backed by the White
House and a senior congressional ally, sought to reduce the patent
protection that pharmaceutical companies receive for their
new-to-market biotech products. The House and Senate bills both
limit competition for 12 years, but Obama told Democrats he wanted
changes.
The fast-paced events came as senior lawmakers spent parts of a
second consecutive day at the White House for bargaining over terms
of a final compromise, and Obama gave a rousing speech to rank and
file House Democrats in a late-afternoon appearance in the Capitol
complex.
Referring to polls that show lagging support for the legislation,
he told Democrats, "I know how big a lift this has been."
In remarks that look ahead to the fall campaign, he added, "If
Republicans want to campaign against what we've done by standing up
for the status quo and by standing up for insurance companies over
American families, that is a fight I want to have."
Later in a closed-door session with lawmakers, Obama said that once
the bill is signed, he intends to travel the country in a series of
election-year appearances designed to trumpet the changes it would
make, Rep. Jared Polis, D-Colo., said.
"That was important for members to hear," Polis said. "They wanted
to make sure that the president, who commands the biggest soapbox
in the nation, is going to deploy it for health care, and he made
it very clear that he is."
Republicans are nearly unanimously opposed to the legislation, and
have made clear they intend to try to turn it to their advantage in
midterm elections this fall in which 37 Senate seats and all 435
House seats are at stake.
The president wants legislation to expand health care to millions
who lack it, crack down on insurance industry practices such as
denial of benefits on the basis of pre-existing medical conditions
and slow the growth of health care costs generally.
The president has told lawmakers he wants the tax on high-cost
plans included in the legislation to help rein in costs. But that
position courted conflict with labor leaders who fear exposing
their membership to higher taxes, as well as with House Democrats
who omitted it from the legislation they initially passed.
The day's events underscored the urgency with which the White House
and top Democrats were working, and the tentative agreement on a
new tax on high-cost plans was the most prominent fruit of the
effort.
"This was a very critical issue that had to be resolved, and I
think it has been," said Rep. Rob Andrews, D-N.J., who told
reporters he had been briefed on the emerging agreement to impose a
tax on costly insurance plans.
While not all details were set, it appeared the union leaders had
backed down on their outright opposition to a new tax, and the
White House had agreed to several concessions to mollify their
concerns.
In a significant victory for unions, the 40 percent excise tax
would not apply to policies covering workers in collective
bargaining agreements, state and local workers and members of
voluntary employee benefit associations through Dec. 31,
2017.
Rep. Joe Courtney, D-Conn., and others said the tax would apply to
fewer plans than was the case in the Senate-passed bill and would
exclude the value of dental and vision coverage. They added it
would provide an exemption for residents of states where the cost
of health care is particularly high, as well as for employees of
high-risk professions.
Courtney, who had led opposition to the tax, said he wanted to see
final details before deciding whether he would support the
agreement.
Union leaders told reporters on a conference call that the
tentative agreement would raise the threshold on insurance policies
subject to tax from $8,500 in the Senate-passed bill to $8,900 for
singles and from $23,000 to $24,000 for family coverage. Even the
new thresholds would be subject to adjustment if unexpected rises
in health care occur by the time the plan is effective.
Additionally, AFL-CIO President Richard Trumka told reporters that
beginning in 2017, all health plans _ union and nonunion _ would be
permitted to seek coverage in insurance exchanges that would be set
up under the bill to allow consumers to shop for coverage issued
under federal regulations.
White House officials disputed that, saying the issue was not
settled.
Originally, the tax included in the Senate bill was estimated to
raise $149 billion through 2019. Trumka said the revisions would
reduce that amount by $60 billion _ money that negotiators would
have to find elsewhere or else reduce the coverage in the
legislation.
While the tax would be applied to high-cost plans, the
Congressional Budget Office has said its principal impact would be
to prompt consumers to purchase lower-value coverage. That, in
turn, would raise the income tax they pay by reducing the deduction
they can take for health care expenses.
Officials said the agreement was thrashed out over more than 15
hours of negotiating at the White House that ended after midnight
Wednesday.
In an indication that lawmakers and the White House were driving
for a swift agreement, House Speaker Nancy Pelosi, D-Calif., and
House Majority Leader Steny Hoyer, D-Md., issued a statement
pledging to have any final bill posted online for 72 hours before a
vote is called.
A spokesman said the plan would require the Congressional Budget
Office to issue a formal report on the bill's cost and coverage
before the 72-hour clock began running.
Once a final compromise is reached, Democrats intend for a vote
first in the House, then a final showdown in the Senate. There,
Majority Leader Harry Reid will need to post a 60-vote majority to
clear the way for final passage.
Republican opposition has been virtually unanimous in both houses _
only Rep. Anh (Joseph) Cao of Louisiana among GOP lawmakers has
voted for the bill _ and there is not a vote to spare in the
Senate.
There, Democrats have 58 votes; independents aligned with them hold
two.
Posted: January 2010
