Health Treats Aimed at House

‘Cadillac' Tax Problem Persists

Posted February 22, 2010 at 6:58pm

President Barack Obama offered House Democrats nearly $80 billion in sweeteners Monday to get them to sign on to the Senate’s version of health care reform.

And while the concessions are significant, it’s not clear yet whether they will be enough.

Obama’s $950 billion bill largely follows the Senate’s approach. There’s no public insurance option and no national insurance exchange, and Obama wants to keep an excise tax on high-cost “Cadillac” insurance plans that most House Democrats oppose.

But the sweeteners are considerable. The excise tax wouldn’t hit anybody until 2018, and even then it would only affect insurance plans costing more than $27,500 for a family. Obama’s plan also includes billions more than the Senate’s for subsidies for the middle class and aid to states for expanding Medicaid and community health centers.

The plan would ditch a special Medicaid deal for Nebraska and close the “doughnut hole” for seniors under the Medicare Part D prescription drug program. And Obama also proposed a new provision giving the government the ability to limit private insurance rate increases.

A Democrat with knowledge of the process said nearly all of the changes proposed by the White House were aimed at easing House Democrats’ concerns.

The excise tax remains the heaviest lift for Obama in the House, with many considering the idea to be political poison, especially after Sen. Scott Brown (R-Mass.) won his shocking upset last month.

The fact that the excise tax now “comes way in the future certainly seems to address some of their concerns,” the Democratic source said.

And a House Democratic leadership aide said, “[Obama] recognized that it’s a problem and he cut it back.”

“This is what we were negotiating back in January,” said another Democratic source close to the negotiations. The major bone thrown to House Democrats is that “80 percent of the Cadillac tax is gone,” the source said.

Obama also jettisoned the idea of giving special treatment to union members after it was criticized as another backroom bargain for a special interest.

But some House Democrats suggested the president had scaled back and delayed the idea so much that it was no longer worth the political hit.

“There’s still a downside to voting for a tax that I think the American people are very suspicious of,” said Rep. Joe Courtney (D-Conn.), who has led the fight against the excise tax in the House. Courtney said that rather than include a tax taking effect more than two presidential elections away, it makes sense to drop it and have it studied by the president’s bipartisan deficit commission instead.

Courtney, however, did give Obama credit for moving in the House’s direction. “I don’t want to sound like an ingrate,” he said. “They certainly moved substantially from where they started.”

Liberals praised Obama for producing his bill but said they would continue to push for a public option and weren’t willing to give up on it yet.

“I and many other progressives would enthusiastically support the bill if a public option, which would provide insurance industry competition and greatly reduce the deficit, were a higher priority,” said Rep. Raúl Grijalva (D-Ariz.), co-chairman of the Congressional Progressive Caucus. But Grijalva stopped short of calling the lack of a public option a deal-breaker.

Liberal Rep. Anthony Weiner (D-N.Y.) gave Obama credit for finally putting his name on a bill but zinged him for failing to include a public option or a national exchange.

“These concessions to Republicans are in the hopes of winning their support,” Weiner said. “This will simply not happen. We need to stop bargaining against ourselves. Who are we making concessions to?”

Weiner, however, said it was “great news” that Obama appeared to be moving forward with a 51-vote strategy in the Senate. “Democrats wasted a year bowing to the altar of [Sens.] Olympia Snowe [R-Maine], Joe Lieberman [ID-Conn.] and Ben Nelson [D-Neb.] and it got us nowhere,” Weiner said.

The lack of a public option could win some votes from moderates that House Democratic leaders will almost certainly need to pass the bill.

That’s because as many as 10 House Democrats, plus Rep. Anh “Joseph” Cao (La.), the sole Republican to vote for the House bill, may join Rep. Bart Stupak (D-Mich.) and vote against the Senate bill over its language on abortion.

Democrats have also lost two other votes for the health care bill — those of former Rep. Robert Wexler (Fla.) and the late Rep. John Murtha (Pa.). A third Democrat, Rep. Neil Abercrombie (Hawaii), has announced plans to resign at the end of the month.

Democrats would have to pick up offsetting “yes” votes from a group that consists largely of fiscally conservative Blue Dog Democrats who have generally been cool to the idea of a public option.

And the strategy assumes nearly all liberals would grudgingly accept a bill lacking a public option, preferring it to the death of the reform effort overall.

White House Press Secretary Robert Gibbs said Monday that Obama based his proposal on the Senate-passed bill because he believes that is “the best way forward into something that can ultimately wind its way through Congress.”

Gibbs brushed off questions about how the proposal would fare among House Democrats given their opposition to the Cadillac tax. Speaker Nancy Pelosi (D-Calif.) warned weeks ago that substantial changes would have to be made to the Senate bill to pass it in the House. She made a noncommittal statement praising Obama’s bill for including positive elements from both chambers’ bills but did not endorse it.

A House Democratic leadership aide said they planned to go over it with the Caucus starting Monday night.

Meanwhile, as the White House was privately wooing the House, publicly it portrayed its proposal as a basis for bipartisan negotiations with Republicans scheduled for Thursday at Blair House. That idea quickly fell flat, as Republicans pilloried the latest plan as “more of the same” and again demanded that Obama scrap his bill and start over.