Obama OKs Taxing High-End Health Plans

According to the Associated Press, yesterday President Obama warned House Democratic leaders to end their opposition to taxing “Cadillac” health care plans in order to pay for the high costs of health care reform. It was reported that dozens of Congressional leaders opposed the tax included in the Senate’s legislation, but after Obama expressed his preference for the bill many are expecting Democratic leaders to get behind the new tax.

House Democrats want to raise income taxes on high-income individuals instead and are reluctant to abandon that approach, while recognizing that they will have to bend on that and other issues so that Senate Majority Leader Harry Reid, D-Nev., can maintain his fragile 60-vote majority support for the bill.

Pelosi and four committee chairmen met with the president Wednesday as they scrambled to resolve differences between sweeping bills passed by the House and Senate. The aim is to finalize legislation revamping the nation's health care system in time for Obama's State of the Union address early last month.

Despite the dispute over the payment approach, Pelosi, D-Calif., emerged from the meeting expressing optimism.

"We've had a very intense couple of days," Pelosi said. "After our leadership meeting this morning, our staff engaged with the Senate and the administration staff to review the legislation, suggest legislative language. I think we're very close to reconciliation."

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Health Reform: Is Tax on 'Cadillac' Plans Fair?

From the Associated Press:

Schoolteacher Kinzi Blair makes only $46,000 a year, but she has what many would consider a "Cadillac" health plan, now targeted for a big tax increase by health reformers.

She has $10 co-pays and no deductible. She gets generic prescription drugs for $10. Her plan covers mental health counseling, organ transplants, acupuncture. It covers speech therapy for preschoolers and in vitro fertilization.

Sound pretty good?

It surely must to millions of Americans who pay high deductibles, hundreds of dollars for prescription drugs or who have no insurance at all. Blair's circumstance illustrates the debate over taxes and fairness when it comes to health reform.

"For me, it's security," Blair says. "I'm thankful I'm in a job where there is health insurance."

Taxing plans like hers is unfair, says Blair, a kindergarten teacher in San Jose, Calif. Like 57 percent of Americans surveyed in a recent Associated Press poll, she favors a new income tax on wealthy Americans, which the House would impose in its bill to pay for expanding insurance coverage to millions.

But the Senate takes a different approach, including an unprecedented tax on the health insurance of people like Blair. The Senate plan would also increase the Medicare payroll tax for high-income Americans and tax elective cosmetic surgery.

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