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House Dems Debate Cadillac Tax on Insurance Plans

by Ryan Grim

House Democrats met Thursday to devise a negotiating strategy as the two chambers begin to hash out differences between their respective health care bills.

House Speaker Nancy Pelosi of Calif., right, gestures during a news conference on Capitol Hill in Washington, Tuesday, Jan. 5, 2010, to discuss health care legislation. (AP Photo/Pablo Martinez Monsivais) Democrats were nearly unified in calling for the House to push to include its revenue-raising mechanism -- a surtax on the wealthy -- rather than the Senate plan to tax so-called "Cadillac" insurance plans.

Unions strongly oppose the tax on insurance, which would disproportionately hit their members. And as health care costs soar, more and more plans will be caught by the tax.

House Speaker Nancy Pelosi (D-Calif.) told the caucus she's pushing hard and that union efforts should be directed at swaying the White House rather than her.

"What are you calling me for?" Pelosi said she jokes with labor when they press her on the issue.

As a candidate, Obama shredded his opponent, John McCain, for proposing just such a tax. McCain's embrace of the idea, in fact, deeply damaged his standing among union households, internal labor polling showed.

Now in the White House, Obama is supporting the tax on insurance plans.

Freshman Rep. Jared Polis (D-Colo.), who has long been critical of the surtax on the wealthy, which he worries could hit small businesses, spoke up in favor of the tax on insurance. His comments about union opposition to the tax struck some on the call as surprising. Big Labor may be opposed to it, he told his colleagues, but the unions support the Senate plan, which must mean that they'll go along with a bill that includes such a tax.

"I said that the unions supported the Senate bill, which they did," Polis told HuffPost. "So that was just a simple factual statement that the unions supported the bill in the Senate. That was my only mention of unions in my comment."

The AFL-CIO, however, did not back the Senate bill. "But for this health care bill to be worthy of the support of working men and women, substantial changes must be made," said the union's statement upon passage. "[B]ecause it bends toward the insurance industry, the Senate bill will not check costs in the short term, and its financing asks working people and the country to pay the price, even as benefits are cut. The House bill is the model for genuine health care reform. Working people cannot accept anything less than real reform."

Polis said that he thought the tax could get broad support among House Democrats if the price that defines a Cadillac plan is lifted by a few thousand or if it is indexed to the growth of health care costs or if families under a certain income level are exempted.

James Kotalik, a Colorado shop steward with the Service Employees International Union local 105, told HuffPost he's still pushing Polis to oppose the tax. "The excise tax on benefits in the Senate health care bill will affect many middle class Americans, including me. I work as a radiological technologist and my health plan is good, but by no stretch of the imagination is it a 'Cadillac plan.' Yet it would likely be subject to the excise tax when it goes into effect. And since medical inflation is rising much faster than overall inflation, every year more and more people will be affected," he said. "If the goal is to have accessible, affordable, quality healthcare for everyone, why is the mark being lowered? That's why we continue to urge our Representatives in Congress to oppose the tax on benefits."

Polis, however, has the president for cover. "My position on how we should pay for health care reform is much more similar to President Obama's. President Obama asked us to use this particular mechanism because it can reduce health care costs," Polis told HuffPost, adding that one other Democrat spoke up on behalf of the tax.

Rep. Carol Shea-Porter (D-N.H.) spoke in opposition to Polis. a"I was standing up for my constituents," she said. "I have serious concerns about the excise tax proposal and the effect that it could have on middle class families in New Hampshire and across the country."

Democrats on the call also griped about some recent reporting. Rep. Lucille Roybal-Allard (D-Calif.), chair of the Congressional Hispanic Caucus, said that reports that the caucus was leveraging health care to get a commitment from the White House on comprehensive immigration reform are incorrect.

Pelosi pushed back against reports that the House would be rolled by the Senate in cross-Capitol negotiations over the final health care bill.

"Don't buy into that," Pelosi told the caucus, according to a person on the call, then added, emphasizing each word: "Not true for a second."

Much depends, however, on who's defining rolled. The Speaker and the members of her caucus did not vow to hold out for a public health insurance option or commit to oppose any bill that didn't include one, as more than 50 members had previously promised.

The House bill includes a public option; the Senate bill does not. (The public option died in December.)

The House members, meanwhile, argued that if the bill doesn't include a public option, aggressive measures are needed to keep insurers honest and make plans affordable. Several caucus members emphasized the importance of increasing subsidies to make private insurance more affordable -- insurance that people will be mandated to purchase.

Rep. Henry Waxman (D-Calif.), chairman of the Energy and Commerce Committee, pushed for the House version of a national insurance exchange, according to a leadership aide. A national exchange would be easier to police and create more competition, advocates argue; the Senate plan creates exchanges in each of the 50 states.

Rep. Louise Slaughter (D-N.Y.), chair of the Rules Committee, made the case for including House language that revokes the antitrust exemption currently enjoyed by insurers.

More than a hundred members joined the call and 25 either spoke or asked questions, said a leadership aide.

Waxman also spoke out forcefully against giving any special treatment to states that happen to be represented by swing-voting Democrats, according to a person on the call. There was no disagreement on that question.

Senate and House staff will be working through the weekend on merging the bills, Pelosi told her members. The full House caucus will meet on Tuesday back in Washington, as the House gets back to business. The Senate doesn't return until the next week.

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