Obama advisers suggest President might not oppose taxing some employer-sponsored health benefits

Mar 16 2009

The Obama administration is "signaling to Congress" that President Obama "could support taxing some employee health benefits" to help offset the cost of health care reform, a move supported by "several influential lawmakers and many economists" but "opposed by union leaders and some businesses," the New York Times reports (Calmes/Pear, New York Times, 3/15).

During separate appearances on the Sunday talk shows, Lawrence Summers, chair of the National Economic Council, and Christina Romer, chair of the White House Council of Economic Advisers, said that Obama opposes the proposal, but Romer indicated nothing has been taken off the table (AP/Washington Times, 3/16). According to White House Office of Management and Budget Director Peter Orszag said that the proposal "most firmly should remain on the table."

"The proposal is politically problematic for President Obama, however, since it is similar to one he denounced in the presidential campaign as 'the largest middle-class tax increase in history,'" the Times reports. "At the time, even some Obama supporters said privately that he might come to regret his position if he won the election" because he "was potentially giving up an important option to help finance his ambitious health care agenda to reduce medical costs and to expand coverage to the 46 million uninsured Americans," according to the Times. Supporters of the proposal "will not have an easy time selling it," the Times reports. While Republicans "tend to favor taxing the benefits to finance other incentives for people to buy their own insurance," because of how Obama used the issue in the presidential campaign against the Republican candidate Sen. John McCain (R-Ariz.) they likely will not "support a change unless the president himself proposes it," the Times reports.

Reaction

House Ways and Means Health Subcommittee Chair Pete Stark (D-Calif.) said that many Democrats oppose a proposal to tax some employee health benefits. He said, "It's a dumb idea," adding, "We have to maintain as much as we can of the employer payments."

Alan Reuther, legislative director of the United Auto Workers, said, "These proposals would represent a tax increase on working families. They would undermine good health care coverage." Dennis Rivera, chair of SEIU Healthcare, said that the union is "predisposed not to agree to the taxing of health benefits" but might support the proposal as part of a broader health care reform plan (New York Times, 3/15).

FY 2010 Budget Proposal

Obama on Monday "will kick off an all-out grassroots effort" to raise support among lawmakers for his $3.55 trillion fiscal year 2010 budget proposal, the Washington Post reports. Organizing for America, a group under the control of the Democratic National Committee, will administer the campaign, which will include an e-mail that calls on volunteers to visit their neighbors on Saturday and ask them to sign a pledge in support of the budget proposal. OFA also will send a second e-mail that asks volunteers to call lawmakers in support of the budget proposal. In addition, the DNC/OFA Web site this week will begin to offer a new tool that provides users with contact information for their lawmakers to allow them to voice support for the budget proposal.

Passage of "Obama's budget will not be an easy task," as "Republicans have lined up in near-unanimous resistance, and even some Democrats have voiced concerns about the huge deficit ... and the spending priorities outlined in the proposal" (Cillizza, Washington Post, 3/16). According to the AP/USA Today, "Republicans are trying to build on some bipartisan misgivings over President Obama's ambitious spending blueprint, claiming that the deficits and taxes he envisions are 'destroying opportunities for the next generation'" (AP/USA Today, 3/14). Among other provisions, Republicans oppose a measure in the budget proposal that would reduce payments to health insurers that offer Medicare Advantage plans (Moos, Dallas Morning News, 3/14).

USA Today on Sunday examined how the current economic recession will affect budget lobbying efforts. For example, health insurers "are holding their fire" on health care provisions in the budget proposal, USA Today reports (Wolf, USA Today, 3/15).

Editorial

Obama "gets high marks for courage and vision in pushing for health reform" during the economic recession, but a challenge still facing his administration will be to "get Congress to approve thoroughgoing revisions to the system in the face of special interests that will decry them as threats to both jobs and profits," a Boston Globe editorial states. According to the editorial, Obama has "drawn a lesson from the behind-closed-doors Clinton health reform debacle of the 1990s" by allowing Congress, the drug industry, medical device makers, insurers, physicians and hospitals to participate in the discussions during the early stages of reform planning. However, the editorial states, Obama must avoid potential problems by making clear that none of the interests gets a veto over the broad outline for reform. The editorial continues, "Obama has got it right," adding, "Fixing health care cannot wait until the economy is back on its feet because its waste, inefficiencies, and special-interest coziness are a drag on economic growth" (Boston Globe, 3/15).

Opinion Pieces

• Clive Crook, Financial Times: Although Obama's position that addressing health care reform, among other issues, is part of an overall fix for the economy is "not at all convincing," the notion that his administration must "seize the moment" or risk losing momentum on its broader agenda is "a legitimate concern," columnist Crook writes in a Times opinion piece. Crook continues that the prospects for Obama's agenda "depend on his ability to marshal political capital and spend it wisely," which means that "he needs to stay as popular as he can for as long as possible." According to Crook, that is why recent criticism that Obama has "taken on far too much" is relevant. Crook writes that the administration's attempt to pass several different types of legislation, including health care, "threatens a logjam in Congress" and the "'overload' critique ... will erode [Obama's] standing with the electorate" and potentially threaten Obama's ability to pass the proposals (Crook, Financial Times, 3/15).
• David Sirota, Salon: Republicans "have long asserted that private insurance is more efficacious and more adored by patients than government-run programs," columnist Sirota writes in a Salon opinion piece. Sirota continues that the GOP's stance in opposition to a recent Democratic proposal to let citizens buy into a government-sponsored health plan, saying it would force free-market plans to compete with government-run market plans, is "truly perplexing." This "confounding flip-flop ... imperils a health care revolution," Sirota writes (Sirota, Salon, 3/14).
• David Broder, Washington Post: Obama's attempt to overcome "a history marked by congressional gridlock and legislative frustration" in health care reform efforts by hosting a town hall style meeting and allowing Congress to "kick around" proposals "buys him some time," columnist Broder writes in Post opinion piece. However, Broder writes that because "many congressional cooks vie to season Obama's health care stew" with sometimes conflicting aims and proposals, it could signal future difficulties for reform efforts. Broder writes that "expecting Congress on its own to come up with a plan for restructuring one-sixth of the national economy is expecting the impossible" (Broder, Washington Post, 3/15).
• Billy Wharton, Washington Post: Obama's positions on health care are one of many areas that prove he is not a socialist, Wharton, editor of Socialist magazine, writes in a Post opinion piece. According to Wharton, Socialists embrace a single-payer health plan that would provide comprehensive coverage, allow a full range of physician and service choices and eliminate health care bills. Wharton writes that a single-payer health plan proposed by Rep. John Conyers (D-Mich.) this year "makes perfect sense" to Socialists. Wharton writes that Obama's plan would "do the opposite" by giving "private health insurance companies license to systematically underinsure policyholders while cashing in on the moral currency of universal coverage" (Wharton, Washington Post, 3/15).

Broadcast Coverage

• CBS' "Evening News" on Sunday reported on the possibility that Obama would consider a proposal to tax some employee health benefits (Brown, "Evening News," CBS, 3/15).CBS' "Face the Nation" on Sunday included a discussion with Summers about the possibility that Obama would consider such a proposal (Schieffer, "Face the Nation," CBS, 3/15).
• CNN's "House Call with Sanjay Gupta" on Saturday included an interview with former President Bill Clinton about health care (Gupta, "House Call with Sanjay Gupta," CNN, 3/14). A transcript of the segment is available online.
• CNN's "Your Money" on Saturday reported on how health care is a priority for the Obama administration (Romans/Velshi, "Your Money," CNN, 3/14). A transcript of the segment is available online.
• NBC's "Meet the Press" on Sunday included a discussion with Romer on the possibility that Obama would consider a proposal to tax some employee health benefits (Gregory, "Meet the Press," NBC, 3/15).