Obama Leaves Door Open to Tax on Health Benefits

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The Associated Press

Obama Leaves Door Open to Tax on Health Benefits

by
David Espo and Philip Elliott

President Barack Obama meets with governors in the Roosevelt Room of the White House in Washington, Wednesday, June 24, 2009. From left are, the president, Vermont Gov. Jim Douglas, Washington Gov. Christine Gregoire, and South Dakota Gov. Mike Rounds. The governors co-hosted the Regional Forums on Health Reforms earlier this year. (AP Photo/Pablo Martinez Monsivais)

WASHINGTON - President Barack Obama left the door open to a new tax on health care benefits Wednesday, and officials said top lawmakers and the White House were seeking $150 billion in concessions from the nation's hospitals as they sought support for legislation struggling to emerge in Congress.

"I don't want to prejudge what they're doing," the president said, referring to proposals in the Senate to tax workers who get expensive insurance policies. Obama, who campaigned against the tax when he ran for president, drew a quick rebuff from organized labor.

Obama also fielded a pointed personal question during an ABC News town hall at the White House on Wednesday. The prime-time program was the latest in a string of events designed to build public support for his plan to slow the rise in health care costs and expand coverage to the nearly 50 million uninsured.

Dr. Orrin Devinsky, a neurologist at the New York University Langone Medical Center, challenged Obama: What if the president's wife and daughters got sick? Would Obama promise that they would get only the services allowed under a new government insurance plan he's proposing. Obama wouldn't bite.

If "it's my family member, if it's my wife, if it's my children, if it's my grandmother, I always want them to get the very best care," Obama said.

Earlier in the day, the administration and its allies pushed for a prominent display of progress in the Senate before Congress begins a weeklong vacation on Friday.

Senate Finance Committee Chairman Max Baucus, D-Mont., labored in a series of meetings to produce at least an outline of legislation that could command bipartisan support. Of the five House and Senate committees working on health care, Finance is the only one that appears to have a chance at such an agreement.

For their part, key Republicans pressed the White House for assurances that any concessions made now would not merely lead to additional demands at a later date. "We want to know the president is working in good faith along the way as we are," said Sen. Olympia Snowe, R-Maine, after meeting with Nancy-Ann DeParle, the top White House official on the issue.

Baucus appeared especially eager to show progress before the exodus from the Capitol began.

To that end, several officials said he was negotiating with representatives of the nation's hospitals, hoping to conclude an agreement that would build on an $80 billion weekend deal with the pharmaceutical industry.

Hospitals were being asked to accept a reduction of roughly $155 billion over the next decade in fees they are promised under government programs such as Medicare and Medicaid, according to numerous officials.

Officials at the American Hospital Association and the Federation of American Hospitals said they could not comment on any discussions.

Baucus is seeking similar concessions from nursing homes, insurance companies, medical device makers and possibly others, noting that any legislation would create a huge new pool of customers for industry providers.

At its heart, any legislation is expected to require insurance companies to offer coverage to any applicant, without exclusions or higher premiums for pre-existing medical conditions.

Overall, Baucus has said he hopes to hold the size of any legislation to $1 trillion or less, and in private negotiations, there were discussions about further scaling back eligibility for insurance subsidies from the government.

Additionally, Baucus was still searching for ways to cover the cost of his emerging legislation, and numerous officials said he appeared roughly $200 billion shy of achieving that goal. They added that a proposal to make it harder for taxpayers to itemize their medical expenses was drawing renewed interest among key senators as one way to raise revenue.

Current law allows those expenses to be itemized when they exceed 7.5 percent of adjusted gross income. The proposal under review would raise that to 10 percent, officials said.

At the White House, Obama sidestepped when asked if he was open to taxing health care benefits - a proposal he opposed vigorously in the campaign for the White House.

"I have identified the ways that I think we should finance this. I think Congress should adopt them. I'm going to wait and see what ideas ultimately they come up with," he said on ABC's "Good Morning America."

"I don't want to prejudge what they're doing. We've put forward what we think is best."

Organized labor weighed in quickly.

Gerald W. McEntee, president of the 1.6 million-member American Federation of State, County and Municipal Employees, said in an interview that union leaders believe Obama is "a person of his word." He was referring to Obama's opposition to taxing those benefits during last year's campaign.

"They're not going to tolerate that," McEntee said of workers' views of that proposal.

It was the latest in a series of signs of presidential flexibility. He has said he could accept a requirement for individuals to buy insurance, a position he opposed in the campaign.

Baucus and many Republicans support taxing health care benefits, and officials have said discussions center on imposing the tax in cases in which premium costs exceed $17,000 combined in payments by the employer and worker. Democrats want to exempt union members covered by contracts, but Republicans are resisting.

The officials who provided specifics on the negotiations in the Senate did so on condition of anonymity, saying they were not authorized to disclose private talks.

ABC News was the lone network broadcasting Obama's town hall - drawing criticism from Republicans who wanted equal time.

Associated Press writers Erica Werner, Ricardo Alonso-Zaldivar, Charles Babington and Alan Fram contributed to this report.

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