Sen Reid Proposes To Further Trim 'Cadillac' Health Plan Tax
By Martin Vaughan, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Senate Majority Leader Harry Reid (D., Nev.) is
proposing to ease the bite of a tax on pricey insurance plans, as he tries to
craft a health-care bill that will unify Senate Democrats.
In the latest version of the tax on so-called "Cadillac" plans, a 40% excise
tax would apply to premiums in excess of $23,000 for family plans and $8,500 for
individuals, said people with knowledge of the bill.
Under that provision, part of legislative language Reid has sent to the
Congressional Budget Office for cost estimates, more plans would initially
escape the tax than under the bill approved by the Senate Finance Committee. The
Finance Committee bill would have taxed family plans over $21,000, and
individual plans above $8,000.
Reid has not released the bill he sent to CBO, which combines versions
approved by the Finance panel and the Senate Health, Education, Labor and
Pensions Committee. Senate aides cautioned that the details of the bill,
including on the Cadillac plans tax, may change before final legislation comes
to the Senate floor.
Labor unions have been lobbying against the Cadillac tax, claiming that far
from hitting only extravagant plans, it would capture many middle-class people
who pay more for insurance because they are in older insurance pools or have
given up pay for better benefits.
Some Democrats, including Sens. Debbie Stabenow (D., Mich.) and John Kerry (
D., Mass.), despite voting for the Finance bill, have been pressing Reid to
scale back the reach of the tax on high-cost plans.
One of their criticisms is that the tax is indexed in a way such that it won't
keep pace with health-care cost growth--so the tax will affect a growing number
of people each year.
The latest version from Reid leaves the index unchanged from the way it passed
the Senate Finance panel, people familiar with the plan said.
Early retirees and workers in high-risk professions like firefighters and coal
miners would have higher thresholds applied--$24,850 for family plans and $9,000
for individuals, under Reid's proposal.
About a third of insurance plans would be expensive enough by 2019 to be
affected by the tax, Congress's Joint Committee on Taxation estimates. But JCT
projects that many employers will cut their benefit packages and increase wages
to make up for lost benefits, so the tax will actually be levied on far fewer
plans.
Some labor opponents say they can't support taxing health benefits, no matter
how high the threshold. Even if Congress were to set the tax at a very high
level, there would be nothing to stop Congress from lowering it in the future to
raise revenue, said Frank Clemente of the Communications Workers of America.
"It's the principle of the tax, as well as how it would operate in the long
run," said Clemente. "It would become another alternative to close the budget
gap."
The Senate excise tax would take effect for the first time in 2013. It is
opposed by most Democrats in the House, who on Saturday approved a health-care
plan financed in large part by an income surtax on wealthy households.
-By Martin Vaughan, Dow Jones Newswires; 202-862-9244; martin.vaughan@
dowjones.com
(END) Dow Jones Newswires
11-09-091616ET
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