In yet another sign that the President is pushing the Senate version of the health care bill, top House Democrats were summoned to the White House yesterday. They were told that the President prefers the Senate's version of raising revenue by taxing health care plans that cost more. Expect the House to acquiesce, even though this provision is opposed by the one of the Democratic Party's key constituencies, organized labor:
President Obama told top Democratic House members on Wednesday that he favored a tax on insurance companies offering more expensive healthcare plans as a means of extending insurance to millions of people who are not covered, according to a person familiar with the meeting.Today, the Washington Post examined this tax, which Obama now supports, and finds that it has many detractors:
The "Cadillac tax" is a feature of a healthcare bill that cleared the Senate before the Christmas holiday. But the House has chosen another financing method -- a tax hike on the wealthy.
Powerful labor unions at the core of the Democratic base are opposed to the Cadillac tax, saying that in some cases union members gave up wage increases in return for richer healthcare benefits.
"It's a very blunt instrument," said former labor secretary Robert Reich. "It makes far more sense on policy and political grounds to tax the top 1 percent rather than sweep in so many people that are paying more for health care, not because they are getting more health care but because they're older or working for small businesses."
Rep. Joe Courtney (D-Conn.) notes that Obama pledged not to raise taxes on anyone earning under $250,000 and that he attacked Sen. John McCain (R-Ariz.) on the campaign trail in 2008 over his plan to do away with the tax-free treatment of employer-provided benefits. Pro-Republican groups are already turning the tables by running ads accusing Democrats of wanting to tax benefits.
"It's a plan that has great political risk for the Democrats," Courtney said.
