THE TREATMENT OCTOBER 16, 2009
The big question looming over reform negotiations in the Senate is how to pay for expanding insurance coverage. The Senate Finance bill calls for an excise tax, to be levied on plans with generous benefits. But many Democrats don't like the idea. So will they scale it back? And, if so, can they will come up with an alternative? Senator Tom Harkin, new chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, seems to think the answers are "yes" and "yes."
In a conference call today hosted by Families USA, Harkin said the Democrats were likely to make “modifications” to the excise tax. Harkin said that the starting point for taxing such plans--currently $8,000 for individuals and $21,000 for families---was “too low” and said the minimum levels would rise. In addition, Harkin said that there were going to be exemptions to the tax made for individuals who had expensive plans because they had long-term chronic illnesses that required a lot of care, such as dialysis or certain cancer treatments.
Such modifications will help assuage some who are concerned that too many middle-class people will be hit by the excise takes. But the changes will effectively lower the amount of revenue raised to pay for reform, making it more difficult to find a way to increase subsidies and affordability measures. Remember, any new cuts would come on top of the concessions that the Finance Committee already made to labor unions by exempting workers in high-risk jobs from the tax.
Harkin wouldn’t specify what other kinds of mechanisms the Senate Democratic leadership was considering to help fund the bill. But he did say they were examining some of the House’s own funding provisions, which include a surtax on the wealthiest 2 million Americans to pay for reform. “In the end, I think we’re probably going to have to go outside the health care system for some revenues,” Harkin said. “I think that’s what we’re going to have to do.