Tax on 'gold-plated' health care plans gains ground
Tax on 'gold-plated' health care plans gains ground
White House officials are embracing a plan to tax "gold-plated, Cadillac" insurance policies, giving momentum to an idea that is receiving bipartisan consideration on Capitol Hill.
"A premium charge on top of the most expensive packages is one of the ways to ensure that there's a lid on health-care costs," a top administration official told POLITICO. "The president believes this is an intriguing idea."
Sen. Charles Grassley of Iowa, the top Republican on the Senate Finance Committee, said Friday on Bloomberg TV that he is "taking an intense look at it."
And top House leadership official told POLITICO that the plan is "something we can live with."
The idea meshes with House Speaker Nancy Pelosi's comments in recent interviews that the medical industry, including insurers, can do more to contribute to the cost of health-reform legislation.
Obama told Jim Lehrer of PBS' "NewsHour" on Monday: "What's being talked about now, I understand, is the possibility of penalizing insurance companies who are offering super, gold-plated Cadillac plans.
"I haven't seen the details of this yet, but it may be an approach that doesn't put additional burdens on middle-class families," Obama said. "My whole goal is not to add burdens to folks who are already having tough times affording insurance, but actually to relieve it. And so I've got to look at the details of that before I make any kind of final determination.
Sen. John Kerry (D-Mass.) has floated the plan, which would charge an excise tax on policies that exceed a specific amount, perhaps tied to the average benefit received by federal employees.
Grassley said Friday on Bloomberg Television's "Political Capital with Al Hunt": "We're taking an intense look at it. I bet it's been a subject of discussion for two days of the last four or five."
"We're interested in it, not for the sole reason of raising money, although it would do that," Grassley said. "But we have plenty of health economists explaining to us that high-end insurance policies - not that the health-care is not legitimate, but should there be a subsidy of that health-care, and should you have the perverse incentives to over-utilize and have high cost care and drive up the inflation? And we're interested in it as a discipline within health care."
Senator Olympia Snowe (R-Maine), another swing vote on the Finance Committee, said the idea "may be a practical option, as a way of attacking future costs in health care and driving them down and creating disincentives for the most expensive policies," Bloomberg News reported.
A key argument for the plan is that the top few Goldman Sachs executives receive policies worth $40,000 each, the administration official said.
"We want to make sure the insurance companies know that there's a price associated with that," the official said. "That's one way you control health-care costs."
A top industry official responded that the plan is a tax on employee benefits in an indirect guise.
"It's the same tax they're trying to avoid," the official said. "This would be like having a luxury-car tax where you charge BMW rather than the individual. The individual ultimately will be responsible for the payment. It's a tax on fringe benefits."
The official said the tax could be unfair to employees in states with high-cost insurance, including New York, California, Florida, Texas, Illinois and Michigan.
Sen. Jon Kyl (R-Ariz.) told Bloomberg's Heidi Przybyla that the plan would be "a tax on employment, since it clearly would be passed on to employees."
The Finance Committee conversation was first reported Monday by Martin Vaughan of Dow Jones Newswires, who wrote: "Kerry's proposal would stand as a disincentive to insurers to offer high-dollar plans, and would steer employers toward choosing more value-minded plans. The proposal builds off of an approach touted by former Sen. Bill Bradley, D-N.J., during the Democratic health-care overhaul attempt in the 1990s."
White House officials are embracing a plan to tax "gold-plated, Cadillac" insurance policies, giving momentum to an idea that is receiving bipartisan consideration on Capitol Hill.
"A premium charge on top of the most expensive packages is one of the ways to ensure that there's a lid on health-care costs," a top administration official told POLITICO. "The president believes this is an intriguing idea."
Sen. Charles Grassley of Iowa, the top Republican on the Senate Finance Committee, said Friday on Bloomberg TV that he is "taking an intense look at it."
And top House leadership official told POLITICO that the plan is "something we can live with."
The idea meshes with House Speaker Nancy Pelosi's comments in recent interviews that the medical industry, including insurers, can do more to contribute to the cost of health-reform legislation.
Obama told Jim Lehrer of PBS' "NewsHour" on Monday: "What's being talked about now, I understand, is the possibility of penalizing insurance companies who are offering super, gold-plated Cadillac plans.
"I haven't seen the details of this yet, but it may be an approach that doesn't put additional burdens on middle-class families," Obama said. "My whole goal is not to add burdens to folks who are already having tough times affording insurance, but actually to relieve it. And so I've got to look at the details of that before I make any kind of final determination.
Sen. John Kerry (D-Mass.) has floated the plan, which would charge an excise tax on policies that exceed a specific amount, perhaps tied to the average benefit received by federal employees.
Grassley said Friday on Bloomberg Television's "Political Capital with Al Hunt": "We're taking an intense look at it. I bet it's been a subject of discussion for two days of the last four or five."
"We're interested in it, not for the sole reason of raising money, although it would do that," Grassley said. "But we have plenty of health economists explaining to us that high-end insurance policies - not that the health-care is not legitimate, but should there be a subsidy of that health-care, and should you have the perverse incentives to over-utilize and have high cost care and drive up the inflation? And we're interested in it as a discipline within health care."
Senator Olympia Snowe (R-Maine), another swing vote on the Finance Committee, said the idea "may be a practical option, as a way of attacking future costs in health care and driving them down and creating disincentives for the most expensive policies," Bloomberg News reported.
A key argument for the plan is that the top few Goldman Sachs executives receive policies worth $40,000 each, the administration official said.
"We want to make sure the insurance companies know that there's a price associated with that," the official said. "That's one way you control health-care costs."
A top industry official responded that the plan is a tax on employee benefits in an indirect guise.
"It's the same tax they're trying to avoid," the official said. "This would be like having a luxury-car tax where you charge BMW rather than the individual. The individual ultimately will be responsible for the payment. It's a tax on fringe benefits."
The official said the tax could be unfair to employees in states with high-cost insurance, including New York, California, Florida, Texas, Illinois and Michigan.
Sen. Jon Kyl (R-Ariz.) told Bloomberg's Heidi Przybyla that the plan would be "a tax on employment, since it clearly would be passed on to employees."
The Finance Committee conversation was first reported Monday by Martin Vaughan of Dow Jones Newswires, who wrote: "Kerry's proposal would stand as a disincentive to insurers to offer high-dollar plans, and would steer employers toward choosing more value-minded plans. The proposal builds off of an approach touted by former Sen. Bill Bradley, D-N.J., during the Democratic health-care overhaul attempt in the 1990s."