Baucus Expects New Taxes On Worker's Benefits To Be Part Of Reform

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Senators will likely pay for at least a portion of the expected $1 trillion-plus health reform price tag by taxing employer-provided health benefits that are significantly more expensive than the basic plan for federal employees, which costs $13,000 a year for a family, the Washington Post reports. A new tax on the benefits, which are now exempt, is "perhaps the best way to raise money for an overhaul of the health care system," Sen. Baucus, D-Mont., the chairman of the Senate Finance Committee, which must find a way to pay for the bill, told reporters (Montgomery, 6/10).

Baucus said the revenue from new taxes could yield as much as 60 percent of the $1.2 trillion estimate for paying for reform, or as little as 40 percent, Dow Jones Newswires reports. But, most workers will end up being exempt from the tax on employer-sponsored benefits. Aside from the $13,000 cap, benefits already negotiated by unions would be exempt, and the Finance Committee may choose to only tax benefits held by people with six-figure incomes (Vaughn, 6/9).

CQ Politics recaps the controversial tax proposal's recent history in an analysis today. President Obama has remained lukewarm on the new tax; he criticized a similar plan during the campaign. His opponent, Sen. John McCain, made a tax on workers' benefits a cornerstone of his own health reform strategy.

"Using the option would force Obama to go back on his campaign rhetoric," CQ reports. "But administration officials are willing to live with a rhetorical flip-flop if it helps them do the math and fundamentally reshape the fastest-growing segment of the economy" (Bettelheim, 6/10).

This information was reprinted from kaiserhealthnews.org with kind permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery at kaiserhealthnews.org.

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