Dems Divided Over How To Pay For Reform

Democrats are divided over where the funds to pay for a health care overhaul will come from.

President Barack Obama has stated that the health care bill should cost less than $900 billion, which is $100-200 billion less "than what the House had in mind, cuts that could lead to less coverage and smaller subsidies to buy insurance," Politico reports. "It shouldn't shock anyone that the health care fight has boiled down to a clash over money — or, more particularly, who pays for what? The problem is that Democrats don't see eye to eye on who'll foot the bill, setting up yet another battle inside the party over the final shape of the legislation." In the House, the health care bill "asks the wealthiest Americans to subsidize coverage for lower-income people who don't have insurance with a so-called millionaires' tax," while the bill proposed by Sen. Max Baucus, D-Mont., asks "some middle-class Americans with top-tier insurance — the so-called Cadillac plans — to help pick up the tab." President Obama, meanwhile, "who has been supportive of a tax on couples making more than $1 million and, on Sunday, defended the idea of taxing insurers who offer the high-end insurance plans" (O'Connor and Brown, 9/20).

The Associated Press reports on how much industry groups will contribute to paying for the overhaul. "It was a watershed moment in the health care struggle: Leaders of the insurance, hospital and other medical industries stood with President Barack Obama at the White House and promised steps to save $2 trillion over the next decade. Whatever happened to those savings, announced with much fanfare well before Congress had written any of the costly health overhaul bills now in play? Industry groups say they're a work in progress. Many health analysts say they're largely speculative." One hurdle is that "the $2 trillion in reduced costs for care, administrative work and other medical expenses were supposed to be savings for the entire economy, not just the government. That means that even if the savings were realized, much of it — no one knows exactly how much — would not be available to help Congress pay for its health overhaul bills" (Fram, 9/21). 

The New York Times reports on the proposed tax on so-called Cadillac Plans: "Although cast as a tax on gold-plated insurance policies for the well-heeled, it has prompted anxiety among the middle class." The tax is intended to raise money for the overhaul, but also to "intended to discourage the overly generous coverage that many experts say has helped propel the country's reckless spending on medical care. As it turns out, though, many smaller fish would get caught in Mr. Baucus's tax net. The supposedly Cadillac insurance policies include ones that cover many of the nation’s firefighters and coal miners, older employees at small businesses — a whole gamut that runs from union shops to Main Street entrepreneurs (Abelson, 9/20).

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