The Cadillac Crunch
Does health care reform hinge on a stand-off between Obama and House Dems over taxing high-end insurance plans?
After more than a year of partisan and policy combat, the epic battle for health care reform may come down to an internal Democrat party tussle: whether or not House Democrats yield to President Barack Obama and accept a tax on high-end insurance plans.
After the Democrats in the House and the Senate passed different versions of health care legislation, several critical matters had to be worked out, including how to finance the reform. The House bill called for a surtax on the wealthiest Americans, The Senate measure included a tax on so-called Cadillac plans. This led to a contentious intra-party squabble. A few weeks ago, House Speaker Nancy Pelosi told several columnists (including me) that this excise tax has "no support" among House Democrats and that "the easiest thing is just to get rid of the whole excise tax."
Yet on Monday, the president released—finally—his own health care proposal, which essentially is based on the Senate measure, with a few changes. And on the excise tax, he sided with the Senate. But he wants it tweaked so that it kicks in 2018, not 2013, and hits fewer plans. His proposal calls for raising the threshold for this tax from $23,000 in premiums for a family to $27,500.
Obama's reforms address some of the complaints from House Dems—but not their fundamental gripe: the tax is bad policy and bad politics. Rep. Jerrold Nadler, (D-NY), who has led the charge against the excise tax, contends that a tax imposed on high-cost plans would likely not cause insurers to become more efficient and reduce costs (the supposed intent) but to cut back on benefits—and employees will end up with higher deductibles and co-payments as a result. Such a development, Nadler adds, will "violate Obama's promise that if you like your plan, you can keep it." Nadler also fears an excise tax is "political poison" because it will hit blue-collar workers (unionized or not) who have managed to obtain high-end health plans. "We lost the Reagan Democrats in the 1970s and 1980s," he says, "because they came to believe that liberals wanted to benefit other people—the blacks, the Latinos—at their expense. We've just gotten them back. And now we're saying to working people, we have to insure other people at your expense. This will destroy the Democratic Party and progressive politics for 30 years."
At that meeting with columnists a few weeks ago, Pelosi estimated that at most there were 20 Democrats in her caucus who might support an excise tax. The White House appears to be banking on a wholesale conversion of House Dems. But it's unclear whether Obama's alterations to the tax—which also include not counting dental and vision benefits as taxable and easing the tax for firms with higher health-care costs due to the age or gender of their employees—will win over Democrats on the House side. According to White House press secretary Robert Gibbs, the White House did not brief the House Democrats regarding its intentions on the excise tax until after the plan was devised. And during a White House conference call about the overall proposal, economic aide Jason Furman was asked if the administration had attempted to work out an excise tax deal with the House Democrats before releasing the plan. He replied that "everyone would appreciate it" if the Obama proposal led to lower premiums. In other words, no.
The immediate reaction from House Democrats on Monday was mixed. Rep. Gerry Connolly (D-VA) says, ""I still don't like the excise tax but I think again the President listened to critics and tried to respond. He significantly increased the threshold—both the individual and family threshold—and he pushed out to 2018 when it would kick in. Those are very substantial concessions to those of us who are uncomfortable with the approach and I think we need to give him a fair shake at looking at that and seeing if that would work." Rep. Lynn Woolsey (D-CA), the co-chair of the House progressive caucus, was non-committal. "It appears that the President has reached 80 percent towards the House," she notes, but adds "there's absolutely no detail."
It appears that the White House may be quasi-sticking it to the House Democrats. On other fronts, Obama's proposal did more to render the Senate bill more to their liking—by boosting provisions that will make insurance more affordable for families and individuals, by strengthening insurance protections for consumers, by dumping the Nebraska sweetener, and by setting up a new federal authority that will help states regulate insurance premiums. (The Obama proposal says nothing about the difference between the House and Senate bills concerning how far to go in restricting funding for plans that could include coverage of abortions.) But the White House is saying the House Ds will have to swallow the excise tax in some form.
That could bring the Democratic Party to a dramatic Tarantino-like stand-off. Can the House Dems accept the modified excise tax as the price of passing health care reform? Will they balk and force the White House and the Senate Dems to yield? Or will the Cadillac crash into a ditch and explode? For health care reform to become law, someone in the Democratic Party is going to have to blink.
Additional reporting by Nick Baumann.
Comments
Insurance
I am shopping for health insurance now and it is NOT fun by any means let me tell you!
Dem lemmings with zombie brains
Bush led the Republican lemmings over the cliff, and that's why the Democrats gained back the majority and the White House.
Now Bush Light Obama is following in Bush's political suicidal footsteps right over the cliff.
The zombie brained Blue Dog DINO-Fascist Democrats in the Senate are following right behind him in lock step, bribed on by the K Street lobbyists. But the question is, will the House refuse to also commit mass political suicide? Or will they set off in a different direction back to the safety of Progressiveland?
Whose Side Is Obama On?
Why does he insist on making the working class which still has something resembling decent health care benefits have to pay a tax on them while he lets the Wall Street bankers take billions of our tax dollars as unearned bonuses without as much as a whimper of protest? As we're losing our jobs while he stimulates Chinese manufacturing? How he wants to "improve" education by burying already stressed teachers with even more work responsibilities at no additional pay and with no administrative support when the problem is the students and their parents? He stands by idly while colleges become too expensive for anyone but the wealthy to afford?
If he was hired to reduce the American people to third world economic status, he's doing a wonderful job!
High premium = "Cadillac" benefits??
As long as insurance companies can base premiums on your gender, past or current health (not deny coverage based on these, but determine premiums based on them) wouldn't this tax end up just falling on women (who pay significantly more than men for insurance) and those with pre-existing conditions who must pay more to get the same? There's a nod to this mid article re: older-than-average companies, but I don't see it really addressed here.
As a young woman with some congenital health troubles I can easily see how on the individual market, my premiums for any decent coverage would end up in the taxable range, without my plan being Cadillac by any means. (I am fortunate to have employer-based coverage now, knock on wood.)
So if the tax is based on premium payment, not the benefits or low deductible, I hardly see how this ends up applying to only so-called Cadillac plans.
Anyone with an answer why this wouldn't fall disproportionately on women, older individuals, and those with health troubles to begin with?
where are these non-unionized blue collar workers
with $27000 health care plans? They don't exist. Who could that possibly be, that earns over $10/hour in health care benefits but isn't unionized? Nadler (and Corn) are just trying to paper over the fact that this is a naked union money grab. There are two Americas, the unionized and everybody else.
union health care
Then why doesn't the rest of America unionize?
People seem to hate unions because their members get living wages, make employers adhere to safety standards that protect workers, and fight for good benefits. Members pay a hefty dues in return and now they get targeted for a new tax. In spite of their benefits, union members are middle class and live on their wages, not their inheritances and portfolios--why pick on them?
wrong!
please read Robert Reich on the "cadillac" tax
it's a tax on chevy plans, not cadillac plans
it will unfairly hit ordinary working Americans, whose plans cost a lot due to a variety of reason....prices vary regionally, by age, by gender, etc.....that's what makes a chevy plan seem like a "cadillac"
the excise tax is UNFAIR
why not tax banksters' bonuses?
they got 17% higher bonuses recently
or---stop escalating the war in AFghanistan, which costs $57.000 per minute ( and tha'ts only for new troops on the ground)
We are NOT debating "health
We are NOT debating "health care reform". We are debating Health Care revenue redistribution. The Democratic leadership has its own personal patrons, such as the trial lawyer lobby who wants another feeding. The Repubs have their own puppet masters. In the end, both will get fresh money for each of their special interests and we (the people) get the bill. I am a lifelong Democrat and still remain one. All the more reason to try to wrestle control of the party from the dilldoes who have scoffed it and back in the hands of ordinary, kind-hearted citizens.
Geez - if I thought that
Geez - if I thought that taxing my "Cadillac" health plan was a good idea I would have voted for McCain...
Median income
The median family income in the US is $47.000. The median individual income is $28.000. And people are complaining about a tax on a benefit! a benefit which is inflated to begin with. What ever happened to patriotism? Paying taxes is one of the only ways in which one can show patriotism. Republicans think that patriotism is the diatribe of Rush Limbaugh,tea parties and flag waving. If paying a few dollars tax on an inflated benefit helps pass a law that will put people back to work then I'm all for it
let the bankers be patriotic
let the bankers be patriotic then
with their billions and billions of dollars in compensation and bonuses
don't break the backs of ordinary middle class working stiffs with this
UNFAIR excise tax
Healthinsuance for everyone
It is hard to watch that the good american people are getting the deep end of the stick, which is - no reasonable priced healthinsurance and care for everyone.
We ALWAYS look at Germany's Nazi Era to see how people can be manipulated. Mindcontrol can happen anywhere.
It is not logical to reject something that is a good for everybody. If I would have stayed in the U.S.I would be dead today. Fortunately I am not a U.S. Citicen and was able to return to my homecountry, to get medical care, by law, it has to be available to everyone, here. As long as you are young and have no serious illness the U.S is o.k.
I realize now at 65 how important healthcare is.
You decite, whats more important to anyone,in any country, to wage wars, or to have health CARE for everybody.
A friend of the wonderful U.S people, with their amazing spirits.
Cadillac tax
How much will that cadillac excise tax bring in? Forget about it if it will help pass the overall bill!
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