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TechnoratiWhite House Open to New Tax on Health Benefits
WASHINGTON -- The White House left open the possibility Sunday that President Barack Obama might pay for his health care overhaul by taxing employer-provided health insurance even though he had campaigned on not raising taxes on middle-class families.
White House adviser David Axelrod said the administration wouldn't rule out taxing some employees' benefits to fund a health care agenda that has yet to take final form. The move would be a compromise with fellow Democrats, who are pushing the proposal as a way to pay for the massive undertaking without ballooning the federal deficit.
"There are a number of formulations and we'll wait and see. The important thing at this point is to keep the process moving, to keep people at the table, to the keep the discussions going," Axelrod said. "We've gotten a long way down the road and we want to finish that journey."
But if Obama compromises on that point, it would reverse his promise not to raise taxes on those earning less than $250,000.
"I pledge that under my plan, no one making less than $250,000 a year will see any type of tax increase," Obama told a crowd in Dover, N.H., last year. "Not income tax, not capital gains taxes, not any kind of tax."
At the time, his Republican rival, Sen. John McCain, R-Ariz., was proposing a tax on health benefits similar to the plan Obama is now considering. Just a year ago, Obama spent millions on campaign commercials attacking the idea.
One ad accused McCain of favoring "taxing health benefits for the first time ever ... taxing health care instead of fixing it. We can't afford John McCain."
A second Obama ad called McCain's approach "the largest middle-class tax increase in history." Driving the point home, it contended the "McCain tax could cost your family thousands. Can you afford it?"
Under the current proposals, a tax on health benefits would affect only those with pricey health plans. The idea would be to tax as income the portion of health benefits worth more than a specified limit. Officials are considering several options, including one that would set the limit at $17,240 for family coverage and $6,800 for individuals.
Plans worth more than that would be taxed; those worth less would see no increase.
Obama has faced similar criticism before. When he increased taxes on tobacco to pay for a children's health bill, his critics said he was raising taxes on those making less than $250,000 a year.
Obama left open the possibility of a tax during interviews last week, insisting he wasn't taking any option off the table despite his personal opposition. But two of his high-profile advisers - budget chief Peter Orszag and economic adviser Jason Furman - both have indicated they support some taxes on health benefits to pay for the overhaul.
Sen. Chuck Grassley, R-Iowa, said that Obama should step in an oppose the tax if he's truly against it. Otherwise, he faces a loss to his own Democratic Party and his own campaign credibility.
"I think it's going to take presidential leadership to get people of his party to see that we shouldn't be subsidizing high-end health insurance policies that drive up inflation in health insurance," said Grassley, the top Republican on the powerful finance committee.
Grassley - and, to be sure, other Republicans - remember Obama's scathing criticism of their GOP presidential nominee.
"Since the president denigrated John McCain's effort to move in this direction during the campaign, it's going to take, in order to win over Republicans, presidential leadership in that direction," Grassley said.
To help sell his plan, Obama scheduled a town hall-style meeting this week in Annandale, Va., a Washington suburb. He plans to take questions Wednesday from the audience and from online sites such as Facebook, YouTube and Twitter.
Axelrod insisted that the White House has made progress on a health care plan and is working with Congress. Even so, the emerging legislation is hardly the bipartisan collaboration Obama's top advisers had sought.
"One of the problems we've had in this town is that people draw lines in the sand and they stop talking to each other," Axelrod said. "And you don't get anything done. That's not the way the president approaches us."
Axelrod appeared on ABC's "This Week" and NBC's "Meet the Press." Grassley appeared on "This Week."
23 Comments so far
Show AllI agree wholeheartedly with johntwodogs above. And, while I am a supporter, totally, of single-payer Medicare For All, there is a begged question.
Single-payer, Medicare For All, would bypass the current private health care insurance system. What happens to the current employees of the insurance companies? There must be millions of them who will lose their jobs providing their earned income. I couldn't give a crap less what happens to the stockholders (unearned income) or the highly placed executives (also unearned income in my opinion), but what of the rest?
I believe that some current insurance company employees could be absorbed into the existing Medicare system, as more employees there would be needed, and they are experienced in the health care insurance field. But this would probably be a small percentage of the total. What of the rest? Should we provide retraining for them or otherwise offer some sort of "soft landing"? Ideas? Questions? Criticisms?
Just as HR-676 is never dicsussed in the mainstream media, we readers and writers in the "alternative media" never seem to mention how we deal with the mass employment displacement of the insurance company employees.
Even on Medicare I still must buy extra health insurance to make up for our government's niggardly payments.
Notice that HR 676 is not being discussed on the MSM? No news program gives it any consideration in the public forum. $550 billion for defense, and $130 billion for the ongoing, never ending, eternal wars was approved in the House for the YEAR 2010! That is $.7 trillion for ONE YEAR! Our Government says it can't afford $1.8 trillion stretched over 10 years for Single Payer Healthcare! At the current rate, fighting wars will cost $7 trillion over the next 10 years, but $1.8 trillion is TOO MUCH FOR OUR HEALTHCARE! This is OUR money. Why don't we have any say on where it goes? Corporate lobbyists take profits from our CONSUMER dollars to buy off Congress to pass bills beneficial to corporations who benefit from OUR TAX dollars. It's WIN, WIN for Congress and the Corporations they are in league with, but WE THE PEOPLE get fucked coming and going. This practice has to somehow be stopped!!!
Twiddling with a potpourri of taxes to pay for a public option is, as many have pointed out, not the way to go. Every one of the taxes proposed to "pay for it" would piss off some group or other. Better to piss off everybody equally with a single payer system that taxes everyone equally. Maybe it would be hard to swallow at first, having your taxes go up, but that idea is of course a canard, a Republican talking point for those too stuck on laissez faire capitalism to admit that taxes would go up less than total health costs would go down.
On the other hand, this looks like a tempest in a teapot. If the cutoff is $6800 a year --that's over $550 a month-- whoever pays more than that for health insurance can probably afford a few more dollars in taxes. And even if you do pay that much, this proposal would only tax the portion above that. I don't see this as a viable money maker for the government, or a huge burden for the middle class.
Better to piss off everybody equally with a single payer system that taxes everyone UN-equally.
Those with obscene incomes have a more valuable bottom to care for.
Sorry-- single payer would tax everyone at an equal RATE, not an equal amount-- and if you're not working you wouldn't pay anything-- as opposed to our current non-system which charges premiums based on your age and medical history-- a total sham and ripoff.
This is probably a stupid question, but why is healthcare, as it is currently taking shape in Congress, going to cost an estimated $1.5 trillion over the next 10 years? What are the specific costs?
There is no public option, so there are no costs there.
Is it to cover the additional costs of insuring the 40-plus millions currently uninsured?
Is it to create a system of electronic medical records?
Or is it simply a bailout of the insurance companies?
Seriously, if someone knows the specific costs, please submit.
These are ROMA numbers - Right Outta My Axx
It doesn't make sense that the health care industry needs another $160 billion a year all of a sudden. It certainly doesn't. The money is to subsidize those who can't afford to buy into the public option. It's been pointed out that the uninsured, when they delay care and wind up at the emergency room, cost everyone else more in insurance premiums to pay for them. Therefore, if the government comes up with a public scheme to cover all the uninsured, everyone else's premiums should go down. (The math works--40 million uninsured x $4000/yr = 160 billion) If the government spends $160 billion to pay for the uninsured, our premiums should go down $160 billion. If they don't, then your question about a big bailout for the insurance companies is not so naive.
That money could be gotten in saved overhead and profit by installing a single payer system, i.e. expanding Medicare with a simple payroll tax to cover everyone and doing away with the waste and profiteering of private insurance. (Medicare needs to be improved, too, people shouldn't need to buy extra insurance to cover the gaps... Medicare's been gradually undermined by the "government can't do anything right" crowd.)
Sh!T, FVCK, DAMM!
http://www.ft.com/cms/s/0/706bbcde-640d-11de-a818-00144feabdc0.html
The above commentary by Clive Crook is quite insightful, although I do not agree with his last paragraph.
This piece is about the Waxman-Markey and healthcare reform currently worked on by Obama and Congress. Also it is about the way Obama “governs” in general.
“Mr Obama aims to keep his promises, which is admirable. Unfortunately, there is a problem. This is not, as many Republicans argue, that neither issue requires forthright action. Both (healthcare reform and global warming) do. The problem is that the bills emerging from Congress are bad and Mr Obama does not seem to mind.”
“On both climate change and healthcare, in other words, the US wills the end but not the means. This is where a president trusted by the electorate and unafraid to explain hard choices would be so valuable. Barack Obama, where are you?
The president has cast himself not as a leader of reform, but as a cheerleader for “reform” – meaning anything, really, that can plausibly be called reform, however flawed. He has defined success down so far that many kinds of failure now qualify. Without hesitating, he has cast aside principles he emphasised during the campaign. On healthcare, for instance, he opposed an individual insurance mandate. On climate change, he was firm on the need to auction all emissions permits. Congress proposes to do the opposite in both cases and Mr Obama’s instant response is: “That will do nicely.”
The White House calls this pragmatism. Never let the best be the enemy of the good. Better to take one step forward than blah, blah, blah. The argument sounds appealing and makes some sense, but is worth probing.”
Each passing day seems to confirm that Obama is a president of status-quo serving the powers that be.
This warmed-over John McCain idea of taxing employee health benefits actually is a highly regressive tax increase upon wage earners (no matter what cutoff formula might be used). Obama had it correct on the campaign trail. It is absurd, having won the election, to now revisit this inherently crappy idea in the interest of bipartisanship, or as "a compromise with fellow Democrats" as this AP article characterizes the partisan dynamic supposedly in play inside the DC beltway.
An equally big objection is that taxing the employees' health benefits will create more inertia to keep private health insurance availability directly linked to one's employment. Start taxing it (by treating the employer's share of the premium as taxable income of the covered employee), and you create a revenue stream. Create such a revenue stream into the federal treasury, and what we are doing is taking yet another step back, a step away from creating a genuine national health care system - you know, change we can actually believe in.
My two-person law firm is a good, real world microcism example of how unjust and economically stupid this health benefits tax would be.
Our business has provided comprehensive health care coverage (Blue Cross) as an employee benefit for over twenty five years. We currently have an insured group of four - two attorneys, two paralegal/clerical employees, each of whom have worked continuously for our office for over twenty years. Our faithful staff's hourly pay is less than it otherwise would be, but having full medical, dental and eye care benefits paid for by the business is a sane and sensible tradeoff (the pros and cons of which have been discussed at several of our year-end meetings).
Right after payroll and the electric bill, paying the monthly stroke to keep everybody with health care coverage has always been our business's priority creditor. In terms of gross amount, it also is by far the largest regularly recurring overhead expense - just over $2,000 per month at the latest rate - to maintain coverage for this group of four people as we all approach retirement age. Like I said, our firm has been getting by this way (often temporarily robbing Peter to pay Paul), in times of both boom and bust, for nearly thirty years now.
If this warmed over GOP health benefits tax gets enacted, suddenly both our paralegal/clerical employees get their income taxes increased. Their "income" is higher only due to an accounting sleight of hand, but the increased amount paid quarterly into the federal treasury for their income taxes gets fronted up in real world dollars. Everybody's health care coverage stays the same. The price simply goes up for the employees (due from the employer in their withholding).
If, instead of using tax accounting gimmickery to keep subsidizing private, employment-based health insurance, we shifted to a genuine national health system, you do the math. Without having to pay any monthly health insurance premium, immediately there would be $2,000 per month available for long overdue wage increases or other overhead items. And there is absolutely now way in hell that with a single payer system, funded by federal tax revenues, that each of us would find our personal income taxes going up anywhere close to $500 per month ($6,000 per year!) per insured person, in order to simply keep the health care benefits coverage the we already have.
You do the math. Then extrapolate the same model outward nationwide, for big corporate employers as well. Put an end to private health insurance as we know it, and instantly a pool of dollars is created for both employer profit taking or reinvestment, and employee wage increases. What do you suppose the ripple economic stimulus effect of that would be?
Countless studies and analyses over the last fifty years have consistently shown that the staggering inefficiencies in the existing American private health insurance system (for those of us who have coverage at all) guarantees that 30% or more of every premium dollar collected goes for the big insurance carriers' bloated administrative costs.
Obama should get up on his hind legs and announce the goal is to put an end to employment-based private health insurance as we know it, the same as Bill Clinton ended welfare as we once knew it. Tinkering around with the tax consequences of the existing system is a big step in the wrong direction.
Bill from Saginaw
In an attempt to pacify the powerful, and deceive the trusting and unwary ordinary citizen, the feckless federal government uses every dubious twist, turn, and tweak it can invent instead of doing the manifestly sensible and correct thing: single-payer health care.
· Yr Obd't Servant
I am in a relationship with someone who has health benefits through an employer, and this will hurt his income.
I don't have any health benefits through my employer but don't see the point of raising taxes on middle income earners' tax benefits in an attempt to "help" people like me. This proposed "solution" appears to be just another way to sock it to the middle class and to avoid discussing Single Payer as the viable solution.
I think this "proposal" would be an intentional torpedo. "Sorry, no 'public option' because it wouldn't be fair."
They're telegraphing some of the arguments to sink the bloody idea. And in the end, mark my words, it'll be "we'd love to, we know there are problems, but we just don't have the cash right now".
Notice that the pols are *now* just getting concerned about the deficit? Of course, just when there might be some help for ordinary subjects.
They wouldn't NEED all the cash if they did single payer! Morons!
hey, it's just an excuse. it's not like tehy actually mean it. the cash for health care went to wall st, remember?:)
Try to stay away from these they are toxic to sanity
BLEEAH‘S,BLAH’S and BLUES
Bleeah
Mild: This is where you are by yourself and something goes amiss and you stick out your tongue and make that rude noise and spray the countryside.
Bland: The rude and the crude are still there but you are out in public but you don’t care. Denial is part of this one.
Do you need a towel?: The tongue is out and working, denial is still there and someone, something got to near.
Blah: Who set that alarm? The world is requesting your presence and you are still holding your chonies.
Anger management classes working: person, place or thing gets in way; You can walk away.
Schools out: They get in your way, they don’t, they still don’t do what you want! It is life’s fault, not mine!
Blue: Deaf and mute; You don’t have to talk or listen to anyone do you? We’re free: Functionally hide; I just love this one! Lots of us in here.
Lock the door; Literally or figuratively, As you can see it gets more internal as it goes on.
The Secret? Be self-less for there is freedom and peace here. Real peace and freedom! Any other way is a snare and a hindrance. Whether you believe in God or not or you believe that you came from some primordial mass. To get your way you stand in line but with a self-less mind there is freedom.
Self and the worth of you; How much do you think that you are worth to parents, siblings, friends, strangers, pets, God, primordial mass, the postman? All depend on you for something; Look for it you will see. Even the ones who passed on to the other side know and cheer you on. This is science also. Check out the butterfly affect! Tony
mustbefree June 28th, 2009 5:57 pm...Can I not believe in a supreme being and also believe I came from some primordial mass??
undaunted:If I did not say it specifically it does not matter.Your conscience is clear in what you believe;you dont kick your dog and all humanity is a neighbor you have reached a point where many people wish they were.Tony
good lord, but the dems love beating up the bottom. so what does this make now; the sixth straight utterly unholy administration in my lifetime? nice run we got going there.
but hey, i guess i'm free (TM).
I have no problem with a line in the sand when it comes to single payer and other things that should be done but he is a mushy doer and a great reader of speaches.Single payer is for ALL the people the others are eyewash and now they want to tax the people so that the insurance comp. dont get hit?His credability meter keeps going deeper into the pit.Tony
Single Payer Universal Health Care is the ONLY solution!