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Obama Urges Excise Tax on High-Cost Insurance

Source: NY Times

Posted on 08 Jan 2010

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President Obama told House Democratic leaders at a meeting on Wednesday that they should include a tax on high-priced insurance policies favored by the Senate in the final version of far-reaching health care legislation, aides said.

The White House has long expressed a preference for the excise tax on high-cost plans, which health economists say could be an important tool in controlling long-term health care spending for the government and for individuals and families.

But House Democrats have resisted the idea, which is also strongly opposed by many organized labor groups — an important part of the party’s base — because the tax may hit a number of more generous union-sponsored health plans.

The Senate proposal would impose a 40 percent excise tax on the cost of individual insurance policies above $8,500 and on family policies above $23,000, with higher thresholds for retirees and employees in high-risk fields like police officers.

The tax would raise $149 billion over 10 years, according to the Congressional Budget Office. The Senate bill would cost $871 billion over 10 years, while the House bill would cost nearly $1.1 trillion.