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U.S. health care reform cry is: Tax them, not us

Thursday, October 15, 2009 | 12:01 a.m. CDT; updated 8:31 a.m. CDT, Thursday, October 15, 2009

WASHINGTON — Insurance companies, unions and other special interest groups pushed back hard Wednesday against health care legislation that could cost their members billions of dollars.

If they succeed in shifting the proposed taxes away from them, then Congress and the Obama administration will have all the more difficulty paying for the roughly $900 billion, 10-year plan.

A full-page newspaper ad by labor unions and an insurance industry TV ad aimed at elderly Americans are the latest efforts by major groups to transfer burdens to someone else — anyone else.

The lobbying and jockeying worry some lawmakers, who say a closely watched Senate bill that advanced Tuesday is a delicate balance of opposing forces. The Senate Finance Committee endorsed it, 14-9, making it the first health care bill to draw a Republican vote in either house this year.

But new barriers lie ahead.

About 30 unions are running a full-page ad in Washington newspapers opposing the measure's plan to tax generous employer-provided health plans. The ad calls the Senate bill "deeply flawed."

Such efforts may already be bearing fruit. Senate Majority Whip Richard Durbin, D-Ill., told reporters Wednesday that the bill probably will be changed to tax fewer high-cost health plans. "Of course, that will cost money," Durbin said, adding that he did not know where it would come from.

Meanwhile, America's Health Insurance Plans, the industry's trade group, is running a TV ad in six states criticizing the bill's call for more than $100 billion in cuts in Medicare Advantage, under which private insurance companies provide Medicare benefits. The ad says 10 million senior citizens would be asked "for more than their fair share" if the bill passes.

It is airing in Missouri, Louisiana, Colorado, New Mexico, Nevada and Pennsylvania, all of which have high proportions of people on Medicare Advantage plans and moderate Democratic senators whose votes will be crucial.

The Finance Committee bill will be blended with a rival Senate version, and then face many amendment attempts by liberal, moderate and conservative senators. A final Senate bill will have to be reconciled with a House health bill that is likely to differ in many ways.

President Barack Obama will play a huge role in the process. He dispatched several top aides, including White House chief of staff Rahm Emanuel, to the Capitol on Wednesday to huddle with Democratic leaders shaping the legislative packages.

Obama has vowed not to sign a bill that will add to the long-term deficit. That means lawmakers must hold the plan's 10-year cost to about $900 billion, while finding enough savings and revenue sources to cover that amount. Key industries are scrambling to avoid being a target.

"They need to raise $900 billion, and no one wants to fork over the money," said Michael F. Jacobson, executive director of the Center for Science in the Public Interest, which wants Congress to raise money by taxing sugary soft drinks. The soft drink industry opposes the idea in TV and newspaper ads.

The prevailing attitude everywhere, Jacobson said, is "don't tax us, tax them."

Indeed, when 14 Democratic senators recently wrote to party leaders, they said the health proposals must be fully paid for. However, they wrote, they are "extremely concerned" about a proposed $39 billion, 10-year tax on medical devices in the Senate Finance bill.

The tax "could threaten jobs in our states," the senators said, and reduce access "to lifesaving medical devices for patients."

The nation's largest insurers and their major trade group have spent more than $20 million lobbying Congress this year. That doesn't include the more than $130 million spent by drug manufacturers and other medical products makers or the nearly $40 million spent by health professionals, according to the Center for Responsive Politics.

Insurers want to delete or reduce the Senate Finance bill's proposed $6.1 billion-a-year "fee," to be apportioned among insurers according to their market share. Supporters say the fee, or "windfall profits tax," is justified because the legislation would bring the industry millions of new customers.

But Alissa Fox, a top lobbyist for the Blue Cross and Blue Shield Association, said there would be no windfall profits because some of the new customers would incur extensive medical costs.

She said lawmakers also need to increase the proposed penalties for eligible people who decline to buy health insurance. Otherwise, she said, too many will opt out and then buy insurance only when they become seriously ill.

Gerald McEntee, president of the American Federation of State, County and Municipal Employees, said his union will press Senate leaders to advance a bill that offers optional, publicly run insurance coverage and drops the proposed tax on high-cost insurance policies.

"Let's charge the millionaires," McEntee said, "instead of people making $40,000, $50,000 a year."

In other words, don't tax us, tax them.


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