WASHINGTON – Legislation to be outlined next week in the Senate Finance Committee will likely include a new tax on workers with the costliest employer-provided health coverage, officials said Friday, but with implementation delayed until 2013 to minimize any political fallout.
Officials familiar with internal deliberations said the leading option under consideration by Sen. Max Baucus, D-Mont., the committee chairman, would mean higher taxes for workers whose family coverage costs $15,000 a year or more in premiums paid by employer and employee combined.
The provision could generate hundreds of billions of dollars over the next decade to help pay the $1 trillion or more the Obama administration has estimated is necessary under its plan to extend health care to millions of Americans who lack it.
Officials cautioned that details of the proposal could change in the days before Baucus unveils his long-awaited outline. The Finance Committee and several other panels are expected to draft legislation this month, and Democratic leaders have vowed to pass bills in both houses before Congress begins its annual August break. Their objective is to forge a final compromise this fall.
President Barack Obama campaigned against taxing health benefits in last year’s campaign, attacking Republican Sen. John McCain in television advertising when McCain proposed it.
But now, Baucus has told reporters, the president appears open to the idea. Another Democratic senator who attended a recent meeting with Obama said the president did not object when the issue was raised, saying he preferred an alternative he outlined last winter. A 2013 effective date would allow Obama to run for re-election before its impact is felt.
The drive to find $1 trillion or more in health care financing is one of a handful of particularly contentious issues confronting lawmakers and the White House, along with issues surrounding proposed requirements for individuals to purchase coverage or for employers to provide it for their workers.
Perhaps the thorniest issue of all is a deadlock between Democrats, most of whom want a government-run insurance option on the one hand, and Republicans, many of them adamantly opposed to the idea. Key lawmakers in both parties are studying one possible compromise, a proposal for nonprofit cooperatives to offer insurance in competition with private companies.