Baucus expects new taxes on worker's benefits to be part of reform

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).