Obama’s plan: Tax rich to pay for health care

President Barack Obama signaled to House Democratic leaders Wednesday that they’ll have to drop their opposition to taxing high-end health insurance plans to pay for health coverage for millions of uninsured Americans.

In a meeting at the White House, Obama expressed his preference for the insurance tax contained in the Senate’s health overhaul bill, but largely opposed by House Democrats and organized labor, Democratic aides said. The aides spoke on condition of anonymity because the meeting was private.

House Democrats want to raise income taxes on high-income individuals instead and are reluctant to abandon that approach, while recognizing that they will likely have to bend on that and other issues so that Senate Majority Leader Harry Reid, D-Nev., can maintain his fragile 60-vote majority support for the bill.

House Speaker Nancy Pelosi and four committee chairmen met with the president Wednesday as they scrambled to resolve differences between sweeping bills passed by the House and Senate. The aim is to finalize legislation revamping the nation’s health care system in time for Obama’s State of the Union address early next month.

Despite the dispute over the payment approach, Pelosi, D-Calif., emerged from the meeting expressing optimism.

“We’ve had a very intense couple of days,” Pelosi said. “After our leadership meeting this morning, our staff engaged with the Senate and the administration staff to review the legislation, suggest legislative language. I think we’re very close to reconciliation.”

Congressional staff members stayed at the White House into the evening to continue work, and a conference call of the full House Democratic caucus was scheduled for Thursday. Obama is taking a more direct role than ever, convening Oval Office meetings Tuesday and Wednesday of House Democratic leaders.

The House and Senate bills are alike in many ways. Both impose first-time requirements for almost all Americans to purchase health insurance, providing subsidies for lower- and middle-income people to help them do so, though the subsidies in the House bill are more generous. Both establish new marketplaces called exchanges where people can go to shop for and compare health insurance plans. Both would ban unpopular insurance company practices including denying coverage to people with pre-existing health conditions.

Differences include whom to tax, how many people to cover, how to restrict taxpayer funding for abortion and whether illegal immigrants should be allowed to buy coverage in the new markets with their own money. The House bill covers about 36 million uninsured Americans over 10 years, costing more than $1 trillion, while the cheaper Senate bill covers about 31 million.

House Democrats are steeling themselves to abandon establishment of a new government insurance plan opposed by moderates in the Senate, but in return hope to get the Senate to rescind insurers’ antitrust exemption, make subsidies more affordable and agree to establishment of national rather than state health insurance exchanges, among other things. Obama has signaled his support for the House position on the subsidies and other areas, aides said.

The difference in how the bills are paid for is emerging as among the toughest disputes.

The House wants to increase income taxes on individuals making more than $500,000 and couples over $1 million, which would raise $460 billion over 10 years to pay for the bill. The Senate wants to tax insurance companies on plans valued at over $8,500 for individuals and $23,000 for couples, raising $150 billion. Most analysts say the insurance tax would be passed on to consumers, and organized labor is strongly opposed, as are House Democrats, some of whom contend that the tax would violate Obama’s campaign pledge not to tax the middle class.

“We did in our house bill something that protects middle class Americans from having to pay more for health insurance,” Rep. Xavier Becerra, D-Calif., a member of the House leadership, said Wednesday. “So far we want to stay to that principle.”

House members “have been very clear on that issue and working with the president to stick to what he said when he was campaigning for president, we’re trying to make sure this does not affect middle class Americans,” Becerra said.

Obama has defended the tax as a way to drive down health costs.

“I’m on record as saying that taxing Cadillac plans that don’t make people healthier but just take more money out of their pockets because they’re paying more for insurance than they need to, that’s actually a good idea, and that helps bend the cost curve,” the president said in an interview with National Public Radio just before Christmas. “That helps to reduce the cost of health care over the long term. I think that’s a smart thing to do.”

In the end the House likely will have to accept the insurance plan tax at some level — say starting with plans valued at $25,000 or more, with carve-outs for certain union professions — but it might not happen without a fight.

A provision in the Senate bill to increase the Medicare payroll tax on high-earners could provide some middle ground, although that measure would raise only $87 billion over a decade.


  1. Carl Nemo

    “The Senate wants to tax insurance companies on plans valued at over $8,500 for individuals and $23,000 for couples, raising $150 billion.” …extract from article

    This demonstrates the insanity behind this legislation; ie., grub money from those folks that are already paying out of pocket for quality insurance or the organizations that provide such coverage for its employees etc.

    I say that Congress needs to have their current medical plan yanked concurrent with the passage of the final bill and be forced to participate in this nightmare they are creating.  This whole healthcare bill has now degenerated into a slugfest between the House and the Senate with evidently this “cubby” President cheering them on while “We the people” are out of the loop.  It’s an excercise in grand corporatism at its worst!

    They evidently want everyone suffering equally under this same inefficient government sponsored national health plan.  Those that have good insurance plans will be forced to financially participate in this debacle via taxation against their plans.  This nation is so broke they create schemes that will feed on that which is good and functional in order to create that which is dysfunctional and corrupt.

    If they want to tax the wealthy then they need to start mining a percentage of the “trillions” that are stashed away in tax free foundations since the dawn of the 20th century, protecting the wealthy and their fortunes transgenerationally from taxation at the expense of the general population. Foundations do some good, but are basically a scam for the wealthy to squirrel money away in order to avoid estate taxes including any taxation whatsoever on this sheltered capital into the future.  Most citizens don’t realize this. The only requirement is that a foundation must donate a percentage; 5% of its capital gains on charitable or public causes via annual grants with the remainder to be sheltered and continue to grow in perpetuity without paying taxes.  Also administrative costs can be figured into this percentage.  Even simply the rich; ie., multimillionaires, not wealthy (billionaires) are participating in the foundation scam.  They need to slap all foundations both small and large with a Healthcare Tax if they truly want to tax the rich and not play games by taxing existent insurance plans etc. 


    Carl Nemo **==



  2. griff

    And while we’re at it, we should start taxing churches since they insist on weighing in on political matters.

    Not only are these foundations tax exempt, but the larger ones such as Rockefeller and Carnegie are intimately involved in shaping public policy.

  3. Carl Nemo

    Thanks Griff for the add-on comment concerning the ‘exemption’ of churches and how the foundations shape public policy.  In fact starting in the early part of the 20th century it was the foundations; ie., the Rockefeller, Carnegie, Mellon et al. that started shaping our future concerning how schools were to be administered; ie., a broad-based dumbing down of the society to that of “non-thinkers” along with the idea of central banking and evermore power ending up in the hands of the state which they  totally control including the media which sells their collective duopolist party line.  Our entire modern era construct has been engineered and dropped upon us, like it or not!   Cunning indeed and truly our “Matrix”…!

    Carl Nemo **==