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Health Care Reform Costs May Threaten Deal

Giving hope that a widespread agreement can be reached, however, a group of key health care groups came together this week to announce they would cut $2 trillion in health care costs over the next 10 years. Many saw the move as a signal that health care reform is possible this year.

But the health care industry’s willingness to engage is likely to stop short of agreeing to pay a tax to fund reform. Among the plans bandied about is one that would require businesses to provide health insurance to employees or pay a tax to help Washington pick up the slack.

Another source of potential revenue involves ending the “exclusion” benefit given to workers who receive employer-paid health coverage.

Some Republicans have actually shown an interest in taxing employer-provided health coverage as regular income, including Sen. John McCain (Ariz.), who advocated for it during his White House bid last year. But Obama criticized McCain for the proposal, and is unlikely to agree to it now. Organized labor is also likely to resist the idea, as many union workers received expensive, gold-plated health coverage.

“Now that Obama is stuck, we don’t have any incentive to help him out of that trap,” a Republican Senate aide said.

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