House health care tax provisions are friendly to feds
Democratic leaders propose raising revenue by taxing high-income individuals rather than insurers, who could pass on the cost through hikes in FEHBP premiums.
The House Democratic leadership's version of health care reform legislation unveiled on Thursday morning is preferable to a Senate proposal because its tax provisions would be easier on federal employees' pocketbooks, according to a Virginia Democrat.
"We made real progress here," said Rep. Gerry Connolly, D-Va.
Last week Connolly and fellow Virginia Democrat Rep. Jim Moran sent a letter to House Speaker Nancy Pelosi, D-Calif., questioning an excise tax in the Senate Finance Committee's version of the bill. Connolly and Moran noted that even though the 40 percent tax on plans that cost more than $8,000 for individuals or $21,000 for families would be levied directly on insurers, the costs would likely be passed along to employers and enrollees. Federal workers could be hit particularly hard because many of the plans in the Federal Employees Health Benefits Program would exceed the cost threshold and be subject to the tax.
In contrast to the Senate Finance proposal, the House leadership's bill would raise revenue partly through a surtax on individuals earning more than $500,000, or couples earning more than $1 million.
Connolly said he was optimistic the tide was turning toward the House's surtax-funded option.
"I believe the House version is likelier to prevail, because the Senate excise tax approach has lots of people already against it," Connolly said. "Almost everyone agrees that the upper income brackets -- who have benefited so much from the tax policy this past decade -- should shoulder a little bit of the financing for universal health care reform."
The House bill also includes a provision allowing members of Congress to enroll in the public insurance option -- one of the pillars of the act. The Senate Finance Committee's version included similar, but stronger, language requiring lawmakers and their staffers to participate in state-based health exchanges and giving executive branch employees the option of doing so. Initially, the provision -- offered by Sen. Charles Grassley, R-Iowa -- would have included federal workers in the requirement, effectively ending FEHBP, but Grassley agreed to make the move optional for civil servants.
House leaders are aiming to hold a vote on the health care reform bill by Nov. 11. The Senate is not as far along; the leadership still must combine the versions of the legislation passed by various committees into a single proposal.