House, Senate Democrats to face off over health taxes

The 'Cadillac tax' on employer-sponsored insurance will likely be the focal point of a "fierce clash" between Democrats in the House and Senate if it clears the Senate Finance Committee's vote today, the New York Times reports. The provision "is one of the few remaining proposals under consideration by Congress that budget experts say could lead directly to a reduction in health care spending over the long term, by prompting employers and employees to buy cheaper insurance." It is favored by Finance Chairman Max Baucus, D-Mont., and has been endorsed by President Obama.

The tax would raise $201 billion in revenue over the next decade. "Aides to Mr. Baucus, the Finance Committee chairman, said the tax had numerous benefits, and predicted that employers and employees would shop for health plans to avoid it, forcing insurers to rein in costs. ... But the same expectation that employers would adjust their health plans to avoid the tax was cited by some critics as a potential harm for workers."  

"Whether it remains in the bill is emerging as a test of the commitment by President Obama and his party to slowing the steep rise of medical expenses," the Times reports. The more liberal House Democrats are hoping to pay for the legislation by increasing taxes on high-income people (Herszenhorn and Pear, 10/12).

Meanwhile, conservative House Democrats "are raising red flags about the millionaire's tax," Politico reports: "'The problem with the surtax is that wages don't keep up with the costs of health care,' said Rep. Jason Altmire (D-Pa.), a member of the conservative Blue Dog Coalition who would rather not raise taxes at all. ... This financing showdown is unlikely to be resolved until Democrats meld the House and Senate bills in a joint conference committee. In the interim, evidence keeps mounting against both proposals" (O'Connor, 10/13).

Roll Call reports that the GOP is not remaining silent: "the next phase of political jockeying over health care reform had begun almost before the ink was dry on the preliminary, deficit-neutral cost estimate of $829 billion over 10 years bestowed on the Baucus bill last week by the nonpartisan Congressional Budget Office. Republicans moved to discredit the score as gimmicky, built on huge tax increases and just flat-out inaccurate, while Democrats — particularly those who were often the most frustrated with Baucus' insistence on moving deliberately and crafting a deficit-neutral bill with GOP input — referred to it as a game-changer. This fight should carry over into this week, with its staying power highly dependent on whether the forthcoming merged floor bill receives a similar, political boost from the CBO" (Drucker, 10/13).