Tax on expensive health plans proposed

Baucus, key Senate negotiator, offers proposal that lacks public option but includes co-ops and would impose tax on high-end insurance plans.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)

Doctor shortage: Who should fill it?
The U.S. health care system is struggling with a shortage of primary care physicians. asked readers -- especially those who are medical professionals -- to weigh in on who can help solve the problem. Here are some responses:
Would you be willing to pay more in taxes for the promise of reducing your health care costs?
  • Yes
  • No

WASHINGTON (CNN) -- A proposed health care compromise by the powerful chairman of the Senate Finance Committee lacks a government-run insurance option and would tax the most expensive health insurance plans, a source close to the discussions told CNN Monday.

As expected, the proposal from Sen. Max Baucus, D-Montana, excludes the so-called public insurance option to compete with private insurers. However, it would allow for the creation of nonprofit health care cooperatives -- an idea that some moderate Democrats and Republicans have expressed possible interest in supporting.

The potential compromise proposal was sent to key Finance Committee negotiators Saturday night. It is considered a last-ditch effort to secure Republican votes for a health care bill as President Obama pushes the issue with a planned speech to a joint session of Congress on Wednesday night.

So far, none of the three Republican senators involved in talks with Baucus on the compromise have indicated whether they support the version he is proposing.

Congressional liberals are pushing strongly for inclusion of a public option; conservatives are sharply opposed. Obama has said he supports a public option, but has not clearly indicated he will veto a bill that fails to include it.

On Monday, Obama reiterated his support for a public option in a Labor Day speech to a union gathering in Cincinnati. He outlined Democratic health care proposals that include a public option as part of a menu of insurance choices, including private health care plans, that the legislation would create.

"I continue to believe that a public option within that basket of insurance choices would help improve quality and bring down costs," Obama said.

The president also indicated he would push hard for the House and Senate to move forward on passing health care legislation in his upcoming address to Congress.

"The Congress and the country have been engaged in a vigorous debate for many months," Obama said. "And the debate has been good, and that's important because we have to get this right.

"But every debate at some point comes to an end," he continued, to growing applause. "At some point, it's time to decide. At some point, it's time to act. And Ohio, it's time to act to get this done."

The Baucus bill

Baucus' bill would cost less than $900 billion over ten years, according to the source who spoke to CNN. The price tag is at least $100 billion less than any other health care reform bill currently under consideration by Congress, the source said.

As with other reform proposals, the bill would bar insurance companies from dropping a policyholder in the event of illness as long as that person has paid his or her premium in full. It adds new protections for people with pre-existing conditions and establishes tax credits to help low and middle-income families purchase insurance coverage, the source noted.

It creates health insurance exchanges to make it easier for small groups and individuals to buy insurance.

The bill would be paid for, in part, by a new tax on health insurance companies that provide high-end "Cadillac" insurance plans, the source added.

Supporters of such a tax -- initially proposed by Massachusetts Sen. John Kerry and other Democrats several weeks ago -- say will it help curb the cost of health care by discouraging employers from offering such plans. They also argue that consumers, in turn, will be discouraged from overusing the health care system.

Critics claim the new tax will cause insurance companies to raise rates on all of their customers, even those without more expensive plans.

The so-called "Gang of Six" Senate negotiators -- a group of three Democrats and three Republicans on the Finance Committee -- is scheduled to meet Tuesday to discuss the proposal.

The source, while stressing that the proposed bill is not a final product, said it closely reflects the group's work and areas of agreement.

Obama's planned speech to Congress reflects how overhauling the nation's health care system has become his top domestic priority. He laced his speech Monday with references to health care costs rising at three times the rate of wages, and insurance industry practices that deny coverage for pre-existing conditions or prevent people from obtaining coverage if they lose their jobs.

Multiple sources told CNN Friday that the administration is preparing for the possibility of delivering its own legislation to Capitol Hill sometime after the president's address.

One source called the possibility of new legislation a "contingency" approach if efforts by Baucus to craft a deal fall through.

A big open question is whether two Republican members of the Gang of Six -- Sen. Charles Grassley of Iowa and Sen. Mike Enzi of Wyoming -- will support the bipartisan proposal.

White House and Democratic leadership sources have said for some time they do not think Grassley and Enzi will sign on.

A source close to the White House said Friday that the administration is leaning toward dropping the public option, and continues to zero in on trying to convince moderate Republican Sen. Olympia Snowe of Maine -- another of the Senate Finance Committee negotiators -- to come on board.

Snowe and the White House have been discussing a so-called trigger provision that would mandate creation of a public health insurance option in the future if specific thresholds for expanded coverage and other changes are not met.

Support by Snowe would improve the chances of the Senate's Democratic majority to compile the 60 votes necessary to overcome a Republican filibuster against a health care bill.

The Senate Finance Committee is the last of five congressional committees needed to approve health care legislation before it can be taken up by both the full Senate and the full House.

Different forms of the legislation proposed by Democrats have already cleared three House committees, as well as the Senate Health, Education, Labor and Pensions Committee.

--CNN's Ted Barrett and Dana Bash contributed to this report. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.