(Original Post)

Politico.com

July 22, 2009 Wednesday 5:52 PM EST

Durbin says no to August deadline

by Carrie Budoff Brown, Patrick O'Connor

President Barack Obama's goal for action on health care reform before the August recess suffered what appeared to be a fatal blow when Senate Majority Whip Dick Durbin declared the deadline unworkable in the Senate.

Durbin's comments were bad news for Obama in both chambers. House negotiators had hoped to have a Senate bill in place to help break their deadlock with skittish moderates. Democrats in the House don't want to vote for such a contentious bill unless they're sure the Senate plans to act as well.

Earlier in the day, Speaker Nancy Pelosi (D-Calif.) said she had the votes to pass a health reform bill on the House floor, despite the resistance of Blue Dog fiscal conservatives.

But with Durbin's comments putting an end to Obama's August deadline, Democrats in both chambers are moving toward a new target for victory: a bipartisan bill in the Senate Finance Committee and a vote before the House Energy and Commerce panel.

The Senate Finance Committee is still days, if not a week, away from reaching an agreement. And Energy and Commerce Committee Chairman Henry Waxman (D-Calif.) remains deadlocked with centrist Democrats on his panel.

In the Senate, the timeline makes it almost impossible to hold a markup, merge the bill with one approved by the health committee and schedule a floor vote - unless the recess was significantly delayed or a confirmation vote on Supreme Court nominee Sonia Sotomayor was pushed back to September.

The new Democratic thinking is that Obama can legitimately claim progress if two Senate committees and three in the House approve bills by the August break. But even this goal is still not a foregone conclusion, as lawmakers continue to grapple over major issues.

"I've always thought it was just unlikely, given the enormous complexity," Sen. Kent Conrad (D-N.D.) said of the August deadline for passing a Senate bill. "This is not like typical legislation."

But moving the bill out of the Finance Committee by August is a realistic goal, Conrad said: "I think that is."

In the House, Democrats are casting about for a bill that's just right.

The minute authors make a concession to appease one group of restive Democrats, they roil another subset of their rank and file.

A tax on the wealthy is too hot for some, too cold for others. Likewise, an outside commission to trim health care costs appeased the most cost-conscious among them while angering party elders who worry about ceding their constitutional authority to set Medicare rates.

"You can't have both ends of the teeter-totter in the air at the same time," said California Rep. Pete Stark, chairman of the the Committee on Ways and Means' health subcommittee.

In other words, it's time to start making decisions.

Late Wednesday afternoon, Waxman suggested his panel could resume its consideration of the health care bill by Thursday afternoon, with the prospect of clearing the committee by the end of the week.

"We want to reach agreement and go to markup in our committee," Waxman said.

Despite significant hand-wringing by Ways and Means Committee Chairman Charles Rangel (D-N.Y.), Democrats on the tax-writing panel seemed more resigned Wednesday to increasing the income level of a surtax on the wealthy to help fund the package.

The initial bill sought to impose a surtax on individuals who make more than $280,000 a year and couples who earn more than $350,000. But the speaker would be willing to raise those income levels to $500,000 for individuals and $1 million for couples.

Raising the income level wouldn't significantly undermine the money generated for the government; according to an analysis by the Tax Policy Center, 90 percent of the revenue would be generated from taxpayers whose income exceeds $1 million. 

In addition, the surtax would hit only 1.2 percent of the taxpayers in this country, according to the Committee on Joint Taxation. That includes somewhere between 4 percent and 5 percent of taxpayers who make more than half of their income from small businesses, according to estimates from the Committee on Joint Taxation and Citizens for Tax Justice.

Durbin's comments were first reported in The Hill. Obama had pushed the deadline in hopes of forcing the two houses of Congress to act before they head home for August recess - where members and senators are sure to hear from constituents anxious over Obama's plan for a sweeping overhaul of the health system. That could make it even tougher to get a deal when they get back in September.

But in recent days, Obama himself seemed to be backing away from a hard-and-fast August deadline to get bills out of both houses - a bow to the political reality that it simply wasn't going to happen in the Senate, where negotiations are bogged down on making sure the $1 trillion plan does not add to the deficit and can lower the cost of health care over time. Obama has dropped any mention of the August deadline in his appearances to discuss health care since Friday.

The comments last Thursday from Congressional Budget Office Director Doug Elmendorf that the House and Senate health committee bills would not improve the long-term fiscal outlook have slowed the negotiations, according to senators and staff.

After those remarks, the bipartisan group of six Finance Committee senators decided to comb through the entire bill, looking at every piece through the lens of trying to find cost savings. Baucus brought in actuaries, as well as staff from the Joint Committee on Taxation on Tuesday. Wednesday, they submitted more proposals to CBO for cost estimates and focused on making sure the insurance plans available in the exchange were affordable.

"We are actually moving ahead, actually will have an agreement," Baucus said he told the president during a call Wednesday.

"Although we have made a lot of headway, we still have a long ways to go."

And moderates continued to plead for more time.

Pelosi told reporters that she thinks she already has the votes to approve the legislation on the House floor - even if Waxman doesn't have enough to clear his committee - and later told The Huffington Post that she would keep the House in session an extra week if she thought she could pass the bill.

But developments in the Senate will only give reluctant moderates more cover to avoid such a politically volatile vote.

"The president said he wanted it this year," said Louisiana Rep. Charlie Melancon, a spokesman for the Democrats' Blue Dog Coalition and a member of the Energy and Commerce panel who is not yet ready to support the health care bill. "He didn't say he wanted it before the August break."

And Melancon disputed Pelosi's vote count, telling reporters, "I don't see the votes being there to pass this thing."

Negotiators seemed to make the most progress on a White House proposal to grant an outside body the authority to cut government-funded health care costs, despite significant concerns from some powerful Democrats.

"The administration feels that this is a game changer that will hold down cost," said Waxman, who initially opposed the idea and deliberately left it out of his bill. "We thought that holding down costs was just what we needed. ... It allows us to say we have done everything we can in the bill to hold down costs of health care in the future."

But Stark called it "stupid ... at best," adding that the idea is "unworkable, childish, idiotic. I think that covers it."

Gannett News Service

July 21, 2009 Tuesday

Opposition builds to health care tax plan

By BRIAN TUMULTY

Gannett Washington Bureau

WASHINGTON - A growing number of House Democrats, including some members of the New York delegation, oppose imposing an income tax surcharge to pay for health care reform legislation.

The plan, which would impose a surtax on individuals making more than $280,000 and couples making more than $400,000, is part of a bill the House could vote on by the end of the month.

"The bill needs to be more focused on taking costs out of the system," said Rep. Scott Murphy of Glens Falls. "I don't think this is the right way to pay for health care reform."

Rep. Nita Lowey, D-Harrison, also isn't ready to back the surcharge, according to her spokesman, Matthew Dennis.

"Before she supports another tax on her already heavily taxed constituents, she wants to be sure we maximize savings by squeezing insurers as much as possible," Dennis said in an e-mail. "That must be determined before we put more burdens on American families. The process is far from over, though, and she will work to reduce the number of people who could be affected by the surcharge and the amount they would pay."

Rep. John Hall, D-Dover, also has reservations about the tax component.

"This is a bill that is still in a state of flux," Hall said, noting that he's working to make sure small businesses are not harmed.

The 52-member Blue Dog Coalition, a group of fiscally conservative group House Democrats, also opposes the tax proposal and wants more cost-cutting. Three Blue Dogs who serve on the tax-writing Ways and Means Committee voted against the surcharge and related provisions that the committee approved Friday.

The complex legislation needs approval by three committees before a floor vote. Two gave their OK on Friday in split votes.

The Blue Dog Democrats have enough members to block passage, given that House Republicans, including Chris Lee of the Buffalo area, solidly oppose the legislation as currently written.

"It's not just high-income earners; it's going after small business," Lee, a former business owner, said.

He was referring to the fact that about three-quarters of small businesses aren't incorporated and some of those business owners would have to pay the tax surcharge.

Lee advocates an approach that would reduce health care costs first.

In fact, more cost-cutting appears to be required because the Congressional Budget Office announced Thursday that the current legislation would increase health care costs, rather that reduce them.

Liberal Democrats such as Rep. Eliot Engel of the Bronx, Maurice Hinchey of Hurley and Louise Slaughter of Fairport support the move to a top marginal income tax rate of 45 percent.

Hinchey characterized the proposal as "a tiny little surtax on the wealthy," adding, "I think whatever you want to do to help people of this country, you have to pay for it."

Slaughter said, "I just think it's a matter of fairness that they should pay their fair share."

Engel likewise describes the proposed tax as "the most equitable way" to produce the revenue needed. "I think the income threshold is high enough so it really doesn't affect working people, the middle class," he said.

Under the House plan, the new surtax would be 1 percentage point on single wage-earners with adjusted gross incomes between $280,000 to $400,000 and couples earning between $350,000 and $500,000. It would escalate to 1.5 percent for singles making $400,000 to $800,000 and couples with incomes between $500,000 and $1 million. Those earning more would pay a 5.4 percent surtax.

Citizens for Tax Justice, a liberal-leaning advocacy group, estimates 1.8 percent of New Yorkers would face the proposed surtax.

Republicans have soundly criticized the proposal, making it unlikely to be considered in the Senate. Democrats there are continuing closed-door talks with Republicans on a bipartisan approach.

But conservative tax groups such as the Tax Foundation have noted that Democrats already plan to allow the Bush administration's tax cuts for the wealthy expire in 2011, pushing the top marginal income tax rate back up to the 39.6 percent level it was during the Clinton administration.

A surtax of 5.4 percent would push the top marginal federal tax rate to 45 percent.

New York already has a high state income tax and imposes local income taxes in Yonkers and New York City.

The combination of local, state and federal incomes taxes would mean some New Yorkers would face a 56.9 percent rate, according to the Tax Foundation.

New York Sen. Chuck Schumer is one of four Democrats on the Senate Finance Committee negotiating with Republicans on a plan to impose new fees or taxes on insurance companies to help pay for health care reform.

Negotiators are trying to craft a proposal that would keep insurers from passing along the increased costs to consumers.

"I don't have any problem with a surtax on very wealthy people, but I don't know it has the kind of votes in the Senate to do a bipartisan bill," Schumer said.

According to Schumer, a major impetus for targeting insurers is that other health care entities, such as hospitals and pharmaceutical companies, have agreed to cost reductions, while insurers have not. The profits of the nation's 10 largest health insurers have risen from $2.4 billion to $12.4 billion since 2000.

"Their profitability is enough to make oil executives blush," Schumer said.

A spokesman for America's Health Insurance Plans said the industry has embraced a number of proposed reforms.

"We have outlined specific and far-reaching initiatives to help bend the health care cost curve by simplifying policies and procedures so that physicians and hospitals can focus on patient care," said spokesman Robert Zirkelbach.

All told, the health care industry has agreed to $680 billion in cost reductions, but there is still a $320 billion gap in the estimated $1 trillion, 10-year cost of reforms that will need to be covered by revenue raisers.

The tax on health insurers could produce $70 billion to $130 billion in revenue, according to Schumer.

The remaining $190 billion to $250 billion in needed revenue could come from a variety of sources that are on the table, Senate Democrats said.

Among the many options under discussion in the Senate are a phase-out of some income tax deductions that will expire in 2011, a tax on drug companies and an expansion of the Medicare payroll tax to unearned income.

Sen. Kirsten Gillibrand, the state's junior senator, expects the Senate bill to differ from the House version. She is withholding judgment until a bill emerges from negotiations, according to spokeswoman Bethany Lesser.

"It would not be wise to prejudge any proposal at this point before we've seen all the details," Lesser said in an e-mail.

-

Contact Brian Tumulty at btumulty@gannett.com

(Original Post)

Slate Magazine

July 20, 2009 Monday

Health Reform Can Pay for Itself

Timothy Noah

Alarmism is setting in about the health reform bill. "Alliances In Health Debate Splinter," says the Washington Post. "House healthcare plan to add to deficit: analysts," says Reuters, echoing earlier stories about Congressional Budget Office Director Douglas Elmendorf's congressional testimony last week that health reform would be a budget-buster. President Obama's approval ratings are slipping, and public approval of his handling of the health care issue has for the first time dropped below 50 percent. Slate warns readers on its home page, "We're About To Make a Huge Mistake on Health Care." Or maybe health reform is already dead because the Senate finance committee is dithering and six moderate senators are urging the Democratic leadership to slow things down further. Bill Kristol, who helped strangle Hillarycare in its crib, smells blood.

Never mind that the health reform bill last week clearedthree congressional committees (two more to go!) and that the House bill, which is more liberal than the bill approved by Sen. Ted Kennedy's health, education, labor and pensions committee, was endorsed unexpectedly last week by the American Medical Association. While it would certainly be more convenient for health reform to clear Congress before the August recess, a failure to do so, which is looking increasingly likely, will hardly be the devastating setback that's widely supposed. The New Republic's Jonathan Cohn worries that the recess will provide "four long weeks in which special interests can bang away at legislation, running ads and ginning up grassroots opposition." But it will also provide four long weeks in which supporters of health care reform, whose numbers and union backing are not inconsiderable, can bang away at legislators who aren't supporting health reform.

It would also provide four long weeks for Congress to figure out how to pay for the bill. The high cost of health care reform has emerged as the principal political argument against it. But this is an eminently solvable problem-and one that Congress has already solved to a much greater extent than many realize.

The Senate bill, as passed last week by the health committee, would cost about $600 billion over 10 years, according to the Congressional Budget Office's most recent calculation. The health committee proposed no offsetting taxes. But that's because the health committee can't propose any taxes: Taxation lies outside its jurisdiction. The Senate finance committee is giving serious consideration to offsetting health reform's cost by taxing employer-provided health benefits, which currently are not taxed. The exclusion costs the Treasury $250 billion per year. Unions hate the idea of limiting the exclusion, and during the 2008 campaign Obama attacked Sen. John McCain's proposal to eliminate it. But more recently, Obama has signaled that he might support scaling it back.

The health insurance exclusion is regressive, since people making more money tend to receive the most generous health benefits. On the other hand, eliminating the exclusion entirely would increase the tax liability of people earning less than $50,000, as a percentage of income, much more than it would people earning more than $200,000, assuming both groups received health insurance through their employers. A reasonable compromise, therefore, would be to maintain the exclusion for people earning below a certain amount (say, $50,000) and reduce it for people earning more. In the March 17 New Republic ("Tax My Health Benefits, Please"), Cohn noted that a tax scheme along these lines, proposed by Jonathan Gruber of the Massachusetts Institute of Technology, would raise "more than $700 billion over ten years." If included in health reform, such a plan would net the feds a $100 billion surplus during the next decade. As a side benefit, it would exert some pressure on health insurers to lower premiums.

The House bill, as passed last week by the ways and means and education and labor committees, would cost about $1 trillion, according to the Congressional Budget Office's most recent calculation. But this doesn't take into account the bill's sliding surtax on incomes above $350,000, which (according to the joint committee on taxation) would raise an offsetting $544 billion during the same period. (As liberal think tank Citizens for Tax Justice points out, $544 billion is a lot less than what this crowd got during the last 10 years from George W. Bush's tax cuts.) Other taxes in the bill and projected savings in Medicare and Medicaid further reduce the House bill's cost to $239 billion over 10 years. Congressional Quarterlygasps that this is "larger than the [deficit] run by the government for all of fiscal 2007."

But it comes to about $24 billion annually, a manageable amount that could be eliminated by adding in a much more modest scale-back of the health insurance exclusion than the one envisioned by Gruber. Further savings could be achieved if Congress were to adopt the Obama administration's proposal to create a Fed-like Medicare Advisory Council that could set rates for Medicare providers while being somewhat shielded from congressional meddling.

I won't even bother to suggest paying for health reform with a progressive Medicare payroll tax rather than the flat 1.45 percent tax on individuals that we have now. This would be the most sensible way to pay for health reform. Citizens for Tax Justice has a very modest proposal here; note that the top rate would be all of 2.5 percent. But Congress would never approve it. That's a shame, because it would raise $500 billion over 10 years.

"Let's pass [health care] reform by the end of this year," President Obama said today. His language would seem to signal that he's reconciled to waiting for a decent, fiscally responsible bill. It's possible he won't get it. But achieving it isn't all that hard, and it just may be that Congress gives him one.

(Original Post)

Proposals could create highest tax rates in 25 years

Factors: Expired cuts, health care

By Richard Wolf
USA TODAY 

WASHINGTON — Three tax increases proposed by President Obama and House Democrats on the richest Americans could produce the highest tax rates in a quarter-century.

The latest is this week's proposal by House Ways and Means Committee Chairman Charles Rangel, D-N.Y., and others to impose a surtax of up to 5.4% on annual incomes of $350,000 or more to help pay for overhauling the health care system. About 500,000 taxpayers earning $1 million or more would pay the full surtax.

Obama's budget, released in February, calls for letting tax cuts for top earners enacted at the beginning of the decade expire in 2011. That would raise the top rate from 35% to 39.6% on incomes above $373,000.

During the presidential campaign, Obama favored bolstering Social Security by subjecting family income above $250,000 to the 12.4% payroll tax, paid equally by employees and employers. The tax currently is levied on income up to $102,000.

All told, shifting the cost of health care, Social Security and other budget priorities toward high-income Americans would mean an actual tax rate above 45% for the wealthiest — "levels never seen," says Clint Stretch, a tax expert at Deloitte Tax LLP. When top rates were higher, tax shelters helped reduce the percentage of income paid.

White House press secretary Robert Gibbs said this week that Obama "believes that the richest 1% of this country has had a pretty good run of it for many, many, many years." The top 1% had income of $557,000 or more, according to the non-partisan Tax Policy Center.

Relying on top earners to pay for benefit programs risks reversal if Republicans return to power, says William Gale of the Brookings Institution, a think tank. "We cannot do this on the backs of the rich," he says.

Robert McIntyre of the liberal Citizens for Tax Justice says Obama eventually must look beyond the 6.4 million taxpayers earning $200,000 or more. "At some point, you just can't squeeze them anymore," he says.

http://www.nhregister.com/articles/2009/07/16/business/c1-bill16.txt

New Haven Register (Connecticut)

Distributed by McClatchy-Tribune Business News

July 16, 2009 Thursday

Transparency stressed in health care reform bills

by Angela Carter, New Haven Register, Conn.

Jul. 16--Congressional health care reform bills adopted Tuesday and Wednesday by House and Senate committees include provisions from a bill introduced by U.S. Rep. Rosa DeLauro,  D-3, designed to increase transparency about the benefits offered in health care plans.

Based on DeLauro's Informed Consumer Choices in Health Care Act of 2009, the Senate Health, Education, Labor and Pensions Committee included amendments to its version of health care reform legislation requiring insurance companies to clearly disclose provisions on the issuer's right to change premiums, co-payments or other information.

"I am thrilled that both the House and Senate have included these critical transparency and accountability provisions in their health care reform legislation. Consumers should not have to take a stab in the dark," DeLauro said in a statement.

Also, companies would have to disclose the benefits and premiums available under all coverage plans for which an individual or employer is qualified. The information would have to be included in a company's marketing materials.

The Senate language also would create health insurance consumer assistance grants to states to help them establish, expand or support offices dedicated to assisting consumers with questions and educating them on insurance coverage, filing complaints or appeals, and tracking consumer complaints.

Any proposed health care package still must clear the complexities and politics of getting through the full House and Senate, with President Barack Obama's goals of slowing cost increases and bringing coverage to nearly 50 million uninsured.

Senate health committee Chairman Christopher J. Dodd, D-Conn., said he believes the panel has produced legislation the American people want.

But the GOP is saying in an opposition campaign that members believe "the last thing the American people want is government telling them when and where -- or even whether -- they can get medical treatment for their families."

Meanwhile, Citizens for Tax Justice in Washington, D.C., released a report Wednesday showing that 9.5 percent of Connecticut's population is uninsured, but 2.8 percent of residents earning more than $350,000 a year would pay additional taxes to help pay for a public option.

The Associated Press contributed to this report.

To see more of New Haven Register, or to subscribe to the newspaper, go to http://www.nhregister.com. Copyright (c) 2009, New Haven Register, Conn. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

(Original Post)

The Bismarck Tribune

July 16, 2009 Thursday

Pomeroy:Bill would hurt North Dakota providers

by BRIAN DUGGAN Bismarck Tribune

NEWS; Pg. 1A

Rep. Earl Pomeroy,  D-N.D., said he will not support a health care reform bill in his committee today because it could financially hurt North Dakota health care providers.

House lawmakers unveiled a first draft of their plan to reform the nation's health care system on Tuesday, with a public option that would pay health care providers at reimbursement rates used by Medicare, the government health program for Americans 65 and older.

Pomeroy, a member of the Ways and Means Committee, said that would hurt rural states, especially North Dakota, which has some of the lowest Medicare reimbursement rates in the nation - a common concern among North Dakota health care providers.

Pomeroy said officials at Blue Cross Blue Shield of North Dakota figured if a third of their North Dakota beneficiaries transferred their health insurance coverage to the proposed public plan, health care providers in the state would be poised to lose $131 million a year.

"There is no way we will sustain the availability of care if our health care system was to take that big a hit," Pomeroy said, adding, "There's a very regional disparity in this bill. I'm highly annoyed by that inequity."

The Blues, the state's largest insurer, currently pay health care providers 152 percent of the Medicare reimbursement rate, Pomeroy said.

Three House committees are drafting health care policies and are expected to vote on them this week, Pomeroy said. More changes are expected if the legislation reaches the House floor, possibly before August.

Pomeroy said a public option should either pay at the average reimbursement rate or negotiate rates like other insurance companies.

He added that he prefers the proposals in the Senate Finance Committee, chaired by Montana Democrat Sen. Max Baucus with Sen. Kent Conrad, D-N.D., who has touted health care cooperatives over a government-run public option. The committee is still drafting its bill.

"I don't really care what you call it, as long as it plays fair," Pomeroy said. "Whatever presence is created in health reform, I want them to fairly compete and fairly pay hospitals."

But there are provisions in the current House bill that Pomeroy approves of, including a mandate on all Americans to get health insurance and employers to provide it, which would include a public assistance program that would help families earning $88,000 or less to pay for the coverage.

"The premium support will make a tremendous difference in a state like North Dakota where wages are relatively low," Pomeroy said.

The House bill also includes a new surtax for the top 1.3 percent of income earners in the country, which is estimated to pay for about half of the proposed $1 trillion health care reform.

Joint filers who earn $350,000 per year ($280,000 for single filers) would see a 1 percent surtax starting in 2011. Married couples filing $800,000 or more per year ($1 million for singles) would see a 3 percent tax. Those surtaxes also could grow in 2013 if additional money is needed, up to 2 percent of the lowest bracket and 5 percent for the highest.

About 1 percent of North Dakotans would be affected by the new surtax, according to Citizens for Tax Justice, a nonprofit, public interest research and advocacy group in Washington, D.C.

Nationally, about 5 percent of businesses would be affected by the tax, according to the CTJ.

David Flynn, an economist at the University of North Dakota, said the surtax proposal may pass the House, but will likely find some opposition in the Senate.

"If you're going to raise the taxes on the higher income earners for this purpose, that creates a series of problems for incentives to find loopholes," Flynn said. "It's an especially dangerous and difficult way to finance any kind of spending."

Pomeroy said the nation's health care system is in need of a reform, with an estimated 47 million uninsured Americans. He added that 10 percent of homeowners with foreclosures cite health care costs as a reason for their financial troubles.

"Something has to happen," Pomeroy said. "I believe the legislative opportunity to make meaningful health reform is the most significant in several decades."

Congress will have to find the money to pay for whatever proposal eventually emerges, said Mark Jendrysik, a political science professor at UND.

That could mean higher taxes for certain populations - namely the wealthy - and cost cutting on behalf of insurance companies and patients.

"It's going to be ugly; there's not a single constituency that's going to be happy about this," Jendrysik said. "Everyone's going to be burned by it."

(Reach reporter Brian Duggan at 223-8482 or brian.duggan@bismarcktribune.com.)

States News Service

July 15, 2009 Wednesday

HEALTH CARE CHECKUP: GOP PUSHING HIDDEN HEALTH CARE TAX ON ALL AMERICANS, NOT REFORM BY CHAIRMAN GEORGE MILLER

States News Service

The following information was released by the House Committee on Education and the Workforce:

Republicans and right wing commentators who oppose health care reform hope to turn our effort at lowering costs and expanding access into a debate about whether or not to tax small businesses. In opposing our reform they would instead continue the hidden health care tax on all Americans that exceeds the surcharge on the highest income taxpayers that is included in the House bill.

Before you adopt their rhetoric, remember that nearly half of the cost of the House Democrats' health plan would be paid by tight cost controls and forcing down the expense of the health care system. That's a top priority. And as for who will pay higher taxes and who won't under our plan, here are the cold facts.

Only the highest earning 1.2 percent of American households will pay a surcharge for health care reform. That leaves 98.8 percent of American households who will not pay any surcharge at all.

As for small businesses, according to the non-partisan Joint Committee on Taxation, only 4.1 percent of all small business owners will be affected by the health care surcharge. The remaining 95.9 percent of small business owners will be completely unaffected by the surcharge.

Under our bill, a family making up to $350,000 in adjusted gross income (AGI) will not owe any surcharge at all, as President Obama has promised. A family making $500,000 in AGI will contribute $1,500 to help reduce costs and provide access to affordable health care for all Americans - 0.3 percent of their annual income. And a family making $1 million in AGI will contribute $9,000, or 0.9 percent of their annual income.

Who are the highest earning 1.2 percent of all households? They are the same households who over the past 20 years have seen a massive shift in wealth in their favor and who over the last 8 years received the lion's share of President Bush's tax cuts.

Between 2001 and 2010, the richest one percent of taxpayers alone will have received approximately $700 billion from the Bush tax cuts, according to Citizens for Tax Justice. Those tax cuts for the wealthy one percent have been the biggest contributor to the record deficits wrung up during the Bush Administration - deficits that were passed along to President Obama in January.

The Washington Post put it another way. They pointed out that over the past 20 years, the highest earning Americans have seen their tax burden go down and their share of national wealth rise. The share of adjusted gross income claimed by the highest earning Americans doubled, from 11 percent to 22 percent.

Meanwhile, average American working families have seen their wages stagnate, their health care costs spiral out of control, and their share of national wealth reduced.

Many Republicans and right wing commentators would do nothing to reform health care and would instead leave in place the hidden $1,800 a year tax on all Americans in the form of rapidly rising health insurance premiums caused by uncontrolled health care spending and the shared cost of covering the uninsured.

Congress faces a clear choice. Our plan cuts more than $500 billion in health care spending and asks the richest 1.2 percent of all households to make a modest contribution of their income toward the remaining cost of our health care reform effort to reduce costs and strengthen our economy. The main Republican plan --Just Do Nothing -- maintains the hidden tax on every business, large and small, and every American suffering under today's broken health care system.

George Miller (D-CA) is chairman of the House Education and Labor Committee and one of the three principal authors of the "America's Affordable Health Choices Act" introduced this week.

(Original Post)

National Journal's CongressDaily

July 14, 2009 Tuesday

Group: Dems Must Frame Overhaul As 'Stability'

by Anna Edney and Peter Cohn

As House Democrats release their healthcare overhaul bill today, the centrist think tank Third Way took a stab at selling the middle class on the effort when many see the drastic changes coming as something that holds no benefit for them.

The answer, Third Way found, is stability. To that end, it called on lawmakers to promote provisions in their bill that evoke comfort and reliability.

Anne Kim, middle-class program director with Third Way's Economic Program, said the group has been briefing Democratic lawmakers and watching as they incorporate the word "stability" into their talking points.

Talking about key provisions, Third Way said, will help the middle class understand that Democrats want to provide coverage that cannot be taken away. They must also grasp that healthcare changes will not threaten their family's finances, and the reform efforts under way will improve what is not working.

Many in the middle class have insurance, but rising job losses have them concerned that they could lose their coverage. Three areas of Democrats' plans, according to Third Way, will offer assurances that middle-class Americans will be protected "from gaps in coverage between jobs or denial of coverage:" the health insurance exchange; guarantees that insurers will cover everyone; and a pledge to not raise premiums due to a health problem.

This strategy should seek to convince the middle class that costs will no longer threaten to spike out of reach. Those benefits, according to Third Way, include paying providers based on performance rather than quantity; subsidies that will help families and individuals afford coverage; a ban on benefit caps; and administrative standards that will lower premiums as paperwork is reduced.

Third Way also is pushing Democrats to form their message around quality, including concepts such as the medical home, comparative effectiveness research and health information technology, as well as eliminating copayments for preventive services.

Meanwhile, progressive groups are defending a House-proposed surcharge on households earning more than $350,000 in adjusted gross income, arguing it would simply take back many of the tax benefits doled out under former President George W. Bush.

Looking for more? For more on the healthcare reform debate, see our Healthcare Reform page.

A new report by Citizens for Tax Justice out today says only 1.3 percent of taxpayers would be hit with the tax beginning in 2011. The effect varies from state to state; for example, 2.8 percent of people in high-earning Connecticut would pay the surtax, compared to only 0.5 percent in West Virginia. Moreover, the estimated $550 billion tax increase should be compared against $700 billion in tax cuts for high earners as a result of the 2001 and 2003 tax cuts, said CTJ Director Robert McIntyre.

McIntyre also rebutted a GOP claim that over half of the impact would fall on small businesses. He said only 5 percent of taxpayers reporting small business income derive more than half of their earnings from actively running a business.

He added that only business profits would be taxed under the Ways and Means plan, because small business owners deduct hiring expenses and can write off the cost of equipment purchases.

McIntyre and Eric Schoenberg, a former investment banker who is part of a group called Wealth for the Common Good, also endorsed a plan under consideration by the Senate Finance Committee to apply the Medicare payroll tax to unearned income like capital gains and dividends. The wealthy "have benefited enormously," Schoenberg said, adding that "it has long struck me as rather peculiar" that wealthy investors do not have to contribute to Medicare.

(Original Post)

Charleston Daily Mail (West Virginia)

July 14, 2009, Tuesday

Labor and union officials push for federal health care reform;
One group director will travel the state to discuss the reform in town hall meetings

by MICHELLE SAXTON, DAILY MAIL CAPITOL REPORTER

NEWS; Pg. P6A

West Virginia citizen and labor groups are pushing for the first major federal health care overhaul since President Clinton's first term.

"We have a critical window right now with both the president and Congress wanting reform," West Virginia Citizen Action Group Executive Director Gary Zuckett said Monday.

"In this country if you get sick and you're uninsured or underinsured, you stand to lose your house or life savings," Zuckett said. "I don't think it should happen in this country."

Zuckett is traveling the state this month for town hall meetings to talk about federal health care reform and the Employee Free Choice Act.

His group supports President Obama's public insurance option proposal, particularly because people often must change insurance companies when they change jobs.

"These companies can exclude pre-existing conditions," Zuckett said. "Then you're not covered for an illness that you're carrying from job to job."

People can get stuck in dead end jobs they hate because of that pre-existing condition, he added.

"That's a major roadblock to productivity," Zuckett said.

The proposal also could lead to more competition in the industry, Zuckett said. West Virginia's two largest health insurance companies - Coventry and Acordia - have 54 percent of the market, he added, citing American Medical Association data.

"We're not opposed to businesses making money but when it comes to health care we feel the health care business should be providing health care," Zuckett said.

Premiums increased by 75 percent from 2000 to 2007, whereas individual incomes rose just 19 percent, according to a June report from the Health Care for America Now campaign and Families USA.

"We've seen the health care in West Virginia unattainable for 250,000 of our citizens," West Virginia AFL-CIO Secretary-Treasurer Larry Matheney said.

Combined employer-employee premium costs for a West Virginia family of four today comes to about $12,000 annually, Matheney said.

Obama's health care plan was estimated to cost about $1 trillion over 10 years, an amount Zuckett compared to even higher estimated costs from tax cuts during President Bush's administration and the Iraq War.

"Why can't we afford to provide health care coverage for the vast majority of people?" Zuckett said.

Zuckett noted two proposals outlined by Citizens for Tax Justice to help pay for the health reform.

One would involve extending the Medicare tax to cover non-wage income like stock dividends and capital gains and making part of the Medicare tax more progressive.

The other is Obama's proposal to limit benefits of itemized deductions for families earning more than $250,000 a year.

Meanwhile, Zuckett also wants to address what he calls "industry propaganda" about government-run health care and socialized medicine.

"Socialism is this boogeyman, this scarecrow," Zuckett said. "We find in our society and in this country that our society does provide certain benefits to people like public education, libraries, roads, fire and police protection. These are all social benefits.

"I think health care should be included as a social benefit in this country," Zuckett said. "If that's socialism, then so be it."

Matheney said he hoped a vote would be taken up on the health care reform before the August recess.

A rally was planned for Aug. 2 at the state Capitol regarding health care reform and the Employee Free Choice Act. The federal legislation would amend the National Labor Relations Act to allow employees, rather than employers, to decide whether they want a secret ballot election or a voluntary signup to form a union.

"It's really important to level the playing field," Zuckett said. "Right now employers have the upper hand the way the system is set up."

The Employee Free Choice Act would expedite the process and make sure there are no intentional delays, Matheney said.

"Today with the employers' decision for a secret ballot they postpone and delay the election process or they coerce and intimidate the employees," Matheney said.

The legislation also could include civil penalties up to $20,000 against employers who willfully ignore the law, said Matheney, who hoped it would be considered for vote around Labor Day.

Contact writer Michelle Saxton at michelle.saxton@daily mail.com or 304-348-4843.

(See original post)

The idea of taxing health benefits isn't dead yet, but lawmakers are seeking support for other ways to pay for health reform. No option is likely to be popular.

By Jeanne Sahadi, CNNMoney.com senior writer
Last Updated: July 9, 2009: 9:30 AM ET

NEW YORK (CNNMoney.com) -- Lawmakers searching for a way to pay for health care reform are facing some rough waters.

Very rough.

Sen. Max Baucus, chairman of the Senate Finance Committee, has said repeatedly thathealth reform would be paid for with a combination of spending cuts and tax increases.

Baucus and others have made some progress through savings in Medicare, Medicaid and other programs.

On Wednesday, for instance, Vice President Biden said hospitals would reduce costs by $155 billion over 10 years. But nothing is final until that deal between the White House and business -- and a similar one reached with drugmakers last month -- is written into legislation.

And on the revenue side of the equation, there is still no apparent consensus.

This much is certain: Lawmakers must find ways to raise a lot of money.

Congress needs to come up with $320 billion in tax revenue over the next decade to pay for reform, Baucus told reporters Wednesday.

A problem is that one of the biggest revenue-raising proposals might be a no-go for a lot of Democrats and, according to polls, many Americans as well.

At issue is a proposal to scale back the tax break that workers get when their employers help pay for their insurance. Currently, that money is treated as tax-free income to workers. The cost to federal coffers is roughly $260 billion a year.

Taxing individuals on some part of that money could raise tens of billions a year or more.

The proposal is supported by many tax and health policy experts who say the current tax-free treatment contributes to runaway costs. The theory: Workers don't know how much their health benefits really cost because they only pay a portion of the bill. So they are more likely to consume health services they don't really need. Over time, that drives up health costs.

Senate Budget Committee Chairman Kent Conrad, D-N.D., said the idea of taxing health benefits isn't dead. But the proposal could end up being so greatly modified that it would raise far less revenue than originally hoped.

"We are searching for options, and there are a fair number of them that can work," he said Tuesday.

Perhaps, but just as with taxing health benefits, they're almost all bound to be unpopular with one group or another.

In the end, lawmakers may have to be more aggressive about cost containment or finding other revenue raisers, said Linda Blumberg, a senior fellow at the Health Policy Center of the Urban Institute.

"If you take something off the table, you've got to find something to fill the hole," she said, adding that since no option will be universally popular, lawmakers will have to be willing to make tradeoffs.

For instance, she suggested, they could boost sin taxes -- taxing alcohol and cigarettes, as well as sugary drinks, the latter of which has some support in the House but less in the Senate.

Critics say sin taxeswould disproportionately tax low- and middle-income families. But Blumberg noted that they are the same groups that would benefit a lot from health reform. "They'll come out ahead with what they're getting versus what they're paying," she said.

Another possibility might be raising everyone's income tax rates by, say, 1%, Blumberg said.

Or lawmakers could opt to impose a substantive "pay or play" ruleon employers. Such a mandate would require them to provide insurance for their workers or pay into a national insurance exchange to help subsidize their workers' coverage. Several proposals are under consideration -- but like the temperature of the porridge in "Goldilocks and the Three Bears," some are said to be too lenient and others too onerous on employers.

A potentially substantial revenue raiser would be to subject all income -- not just earned income, but also capital gains, dividends and other unearned income -- to the 1.45% Medicare tax paid by individuals. The progressive nonprofit group Citizens for Tax Justice estimates that kind of move -- together with increasing the Medicare tax rate to 2.5% for income over $200,000 ($250,000 for joint filers) -- could raise $500 billion over 10 years.

In a paper exploring different pay-for options, the Senate Finance Committee included expanding the Medicare tax in some ways but not nearly as broadly as applying to all unearned income.

Another idea under discussion on Capitol Hill: Charge an extra income tax known as a surtax on high-income taxpayers.

Lawmakers may also have to reconsider a proposal from President Obama to limit itemized deductions for high-income taxpayers. Neither Democrats nor Republicans liked the idea initially, asserting that it could harm charitable contributions, even though an analysis by the Tax Policy Center suggested the effect would be minimal. The Congressional Budget Office estimated the provision could raise $300 billion over 10 years.

Given how sensitive lawmakers were on the issue of the charitable contributions, however, they could exclude them from the new rule, Blumberg said. But mortgage interest and other popular itemized deductions would still be subject to the limit.

Whatever pay-for options rise to the top for consideration, they'll all face the same litmus test: Who in particular will have to pony up?

Answering that question will cause its own round of skirmishes. The debate is taking place in a very partisan environment, and one in which regional divisions between lawmakers also play a part. Since health care costs vary greatly across the country, paying for reform may disproportionately affect some states more than others. And all that adds up to a very long, hot summer ahead for those on the Hill.

- CNN Congressional producers Ted Barrett and Deirdre Walsh contributed to this report.

(See original post)

July 9, 2009, 01:05 PM ET

By Suzanne Perry

More than 600 nonprofit, advocacy, religious, and labor groups have united to urge Congress to raise taxes on wealthy people to help pay for reshaping the health-care system and other national priorities — including possibly limiting the tax breaks for charitable deductions as proposed by President Obama.

“Today taxes are at a historic low relative to the size of the economy,” says a statement the groups sent this week to lawmakers. Tax cuts in the early part of the decade “disproportionately benefited the most affluent and powerful members of our society,” widened income inequality, added to national debt, and left the country ill-prepared to face its challenges, it says.

The groups call for measures like taxing wealthy households, assessing a “significant” tax on large estates, and closing corporate tax loopholes. They say they support the kind of measures outlined in documents prepared by Citizens for Tax Justice, an advocacy group for low- and middle-income taxpayers. (Those documents include one on revenue proposals and health-care financing.)

Among the items the tax group backs: President Obama’s plan to limit the tax savings for itemized deductions to 28 cents for each dollar spent by couples making $250,000 (individuals, $200,000) to help pay for health-care changes. The wealthiest taxpayers now get up to 35 cents, while people in lower income brackets get less.

The president’s proposal, the tax group says, “would mainly impact those who have benefited the most from the tax policies of former President Bush — the richest one percent of taxpayers.”

While the itemized-deduction proposal has met with a cool reception in Congress, partly because of fears it would dampen charitable giving, lawmakers are still struggling to find the money for a health-care plan and the president’s idea remains in the mix of possible revenue producers.

Citizens for Tax Justice also proposes raising money for health care by extending the Medicare payroll tax, which now applies to salaries and wages, to investment income above certain levels and applying a higher rate to the wealthiest taxpayers. It issued reports this week showing how the Medicare-tax and itemized-deduction proposals would affect taxpayers in each state.

Deborah Weinstein, executive director of the Coalition on Human Needs, a network of antipoverty groups that helped draft the statement sent to Congress, said while health care is now in the spotlight, the groups plan to wage their fight more broadly. “There are a lot of issues that are going to need revenues, especially in a bad economy,” she said.

More than 70 national groups —including the Children’s Defense Fund, Families USA, National Coalition for the Homeless, and YWCA USA — and more than 500 state and local groups signed the statement.

(See original post)

By Stan Lehr
7/8/2009

Congress is being urged to support health care reform. Petitions bearing more than 500 signatures were delivered today to the Indianapolis offices of Senators Evan Bayh and Richard Lugar.

Members of a group called Central Indiana Jobs With Justice gathered outside Bayh's office in the Market Tower building, 10 West Market Street. Their spokesperson, Community Organizer Allison Luthe, said, "We want to make sure that there's a public option that people can choose from."

A mother from Indianapolis, Peggy McDonald, told reporters he adult son didn't have that choice when he was stricken with cancer at the age of 20. To qualify for Medicaid, he had to quit working and spend his college savings.

McDonald says the family's future was altered forever.

The Citizens for Tax Justice and Health Care for America Now are calling for the Medicare tax to be applied to unearned income like capital gains and stock dividends--with a higher rate for the wealthy and a limited exemption for the elderly. They also want limits on itemized income tax deductions for those with higher incomes.

(See original post)

July 8, 2009

ALBUQUERQUE—Two proposals before Congress could pay for national health care reform without gouging working families, according to a report released yesterday by Citizens for Tax Justice.

One of those proposals, which would apply the Medicare tax to capital gains income, would have the greatest impact on just 1 percent of New Mexicans – those in the very highest income bracket. New Mexico’s low-income earners would see an average tax increase as low as $3 a year. Because Medicare is funded through a payroll tax, unearned income – such as the profits on the sale of real estate or stocks and bonds – are currently exempt.

The other proposal, which would limit the itemized deductions that high-income people can take, would not raise taxes at all on moderate- and low-income families. This proposal would raise about $260 billion nationally over the next ten years. The first proposal would raise about $500 billion over the next decade.

“Everybody who works for a living pays into the Medicare trust fund except for some of the wealthiest Americans. That’s just plain unfair,” said Eric Griego, Executive Director of New Mexico Voices for Children. “We must change our priorities as a nation. The fact that millions of American children cannot get health care is shameful,” he added.

Citizens for Tax Justice is a Washington, DC-based nonpartisan, nonprofit research and advocacy organization dedicated to fair taxation at the federal, state, and local levels.

Their report is available online at: http://www.ctj.org/payingforhealthcare.htm.

(See original post)

July 8, 2009

A national tax policy research and advocacy group says expanding the Medicare tax or limiting itemized deductions for the wealthy could cover costs without hurting middle- and low-income people.

By Alison Knezevich, Staff writer
The Charleston Gazette

CHARLESTON, W.Va. -- Various proposals to overhaul the nation's health-care system are taking shape in Washington, but how will Americans pay for it.

A national tax-policy research and advocacy group says expanding the Medicare tax or limiting itemized deductions for the wealthy could cover costs without hurting middle- and low-income people.

This week, Citizens for Tax Justice released state-by-state reports detailing the two proposals. Several local organizations, including West Virginia-Citizen Action Group and the West Virginia Center on Budget and Policy, also endorsed the plans.

"I think these are two progressive proposals that would help us pay for health-care reform," said Gary Zuckett, executive director of WV-CAG. "We can't really afford not to fix the health care system this year."

Zuckett said the plans would "rebalance the tax scales" after the Bush administration's tax cuts for the wealthy.

The proposals would affect states differently because of variations in typical earnings, said CTJ Director Bob McIntyre. On average, West Virginians would pay the least under the plans.

"[West Virginia] would have the lowest average tax hike of any state in the country," McIntyre said.

The current Medicare tax largely exempts the wealthiest Americans whose income mostly comes from investment earnings, McIntyre said.

One proposal would expand the individual portion of the tax -- now a 1.45 percent tax on employees -- to unearned income such as capital gains and stock dividends. It also would hike the individual tax rate to 2.5 percent for earned and unearned income above $200,000.

Under that plan -- which CTJ says would raise about $500 billion over the next decade -- the richest 1 percent of West Virginians would see their annual taxes increase by $6,729, according to CTJ's report. But the middle fifth would only pay $47 extra.

The idea is gaining traction in Washington, McIntyre said: "I see some future for it."

 CTJ also supports a proposal by President Obama to limit the savings value of itemized deductions  -- for things like charitable donations and mortgage interest payments -- for the wealthy. Under the current system, higher-income people get bigger tax breaks for itemized deductions.

Obama wants to limit the savings for each dollar of deductions to 28 cents, which would raise $260 billion over the next decade, CTJ's report says.  The richest 1 percent of West Virginians would pay an extra $3,510 a year in taxes, but most residents wouldn't see an increase at all.

Critics say the plan would hurt nonprofit groups that rely on charitable donations.  

The idea got a cool reception in the U.S. Senate, but "I don't think it's off the table yet," McIntyre said.

Reach Alison Knezevich at alis...@wvgazette.com or 304-348-1240.

(See original post)

July 07, 2009

New Jersey Citizen Action, the NJ Health Care for America Now (HCAN) Campaign, and Citizens for Tax Justice released a new report titled Two Proposals to Pay for Health Care Reform Without Hurting Struggling Families in New Jersey laying out options for paying for quality, affordable health care reform that includes a public health insurance option.

The report, prepared by Citizens for Tax Justice, discusses reforming the Medicare tax and limiting itemized deductions for the wealthiest Americans. The report includes comprehensive, New Jersey-specific information on the limited impact of these proposals on the New Jersey population.

The report recommended that the Medicare tax be extended to cover investment income such as capital gains and stock dividends. The Medicare payroll tax, at a rate of 2.9 percent for most lower- and middle-income Americans, is the one important tax that is dedicated to health care, but it completely exempts wealthy investors. The CTJ report also backed President Obama's proposal to limit itemized deductions, a reform that would affect only 1.3 percent of taxpayers but could raise more than $260 billion over the next ten years.

"The proposals we're discussing would be good policy even if Congress was not trying to raise revenue to pay for health care reform," said CTJ director Robert S. McIntyre. "They make our tax system fairer and more rational. And they would mainly affect the wealthiest Americans, who received the bulk of the benefits of all the tax cuts enacted over the past several years."

Ev Liebman, Director of Organizing and Advocacy at New Jersey Citizen Action, said new revenue is needed for two reasons. First, Liebman said, current revenues cannot pay for affordable, quality health care for all. And second, Liebman said, it is time that the wealthiest Americans pay their fair share.

"Americans see the unfairness in the current system," Liebman said. "They know that the wealthiest Americans - people who make up the top one to five percent in income brackets - aren't paying their fair share. That's what this debate is about."

Over the next two weeks, press events will be held in several dozen states throughout the U.S. to educate constituents and members of Congress that these two revenue options would have a negligible impact on the overwhelming majority of Americans.

New Jersey Citizen Action and Citizens for Tax Justice are members of Rebuild and Renew America Now, a coalition of more than 60 national groups and more than 500 local and state groups that support responsible and fair tax policies to raise the revenue that is needed to pay for important investments such as health care, clean energy, education and infrastructure needs. For more information, please visit www.rebuildandrenew.org

Health Care for America Now - the nation's largest health care campaign - is made up of more than 1,000 organizations representing more than 30 million people nationwide. President Obama and more than 190 Members of Congress support HCAN's principles for health care reform. All across the country, HCAN supporters are organized and mobilized to stress the urgent need for health care reform in 2009 - reform that finally puts our health care needs before insurance company profits.

NJ Health Care for America Now Campaign Partners: 1199 SEIU Health Care Workers East, AFSCME Council 1, Alliance for Disabled in Action, Inc., BlueWave NJ, CWA District One, CWA Local 1032, Grassroots4Change, Family Voices, Garden State Equality, Health Care for All - NJ, Hispanic Directors Association of NJ, Lutheran Office of Governmental Ministries , New Jersey Citizen Action, New Labor, NEXT STEP, North Jersey Grassroots, South Jersey Grassroots, Women's Opportunity Center, Planned Parenthood Affiliates NJ, Statewide Parent Advocacy Network (SPAN), NJ Region of the Workmen's Circle/Arbeter Ring, New Jersey Education Association, Health Professional and Allied Employees (HPAE), NJCA Education Fund, National Association of Social Workers, New Jersey State AFL-CIO, New Jersey Partnership for Working Families, Democracia Ahora NJ, NJ West Hudson Valley Council Union for Reform Judaism

(See original post)

Tuesday, July 7, 2009

Health. A Citizens for Tax Justice report says $760 billion could be raised over 10 years to fund healthcare reform by applying the Medicare tax to unearned income and by limiting itemized deductions for the wealthiest 1.3 percent of Americans. Imposing the Medicare tax on unearned income such as dividends and capital gains, and increasing that tax from 1.45 percent to 2.5 percent for couples making more than $200,000 a year would produce $500 billion over 10 years, the report estimates. To protect senior citizens, the study proposes that $50,000 of investment income be exempted for singles and up to $100,000 for married couples. The report endorses President Obama's plan to limit itemized deductions, which it says could raise $260 billion over 10 years. The study tried to combat complaints that the proposals will hurt wealthy states by noting the hardest-hit state would be Connecticut, where 2.5 percent of taxpayers would be affected. In large states like California and New York, 1.4 percent and 1.2 percent of taxpayers would be hit, it said. Alan Charney of USAction said the group will use the report to fuel grassroots campaigns in the states to gain support for the measures.

(See original post)

July 7, 2009

By Sarah Lovenheim

Citizens for Tax Justice (CTJ), a nonprofit group which targets corporations and the rich, has released a state-by-state cost-assessment of two proposals to pay for health-care reform: a White House plan to limit the benefits of itemized deductions for high-income Americans and one of its own to reform the Medicare tax.

CTJ found that both proposals would save significant funds to help cover reform but concluded that expanding the Medicare tax would save the most money. The White House plan, CTJ reported, would raise more than a quarter trillion dollars over 10 years, while it's own would save one trillion in tax increases over the next decade.

Director of CTJ Bob McIntyre said both proposals "would be good policy even if Congress wasn't trying to raise the money in particular for health care."

McIntyre said critics have complained that the White House proposal "is going to be too harsh on wealthy states that have progressive income taxes," as it involves limiting tax savings from itemized deductions to 28 cents on the dollar for everyone. Yet according to CTJ's findings, "the range among states is really quite narrow," he said.

For example, the report finds that in Connecticut, the state with the highest percentage of taxpayers expected to be affected, only two and a half percent of taxpayers would be impacted. In Vermont, the state with the lowest number of taxpayers expected to be affected, only four percent of taxpayers would be impacted. According to McIntyre, "that is not much of a range" to be concerned about.

The bottom line, he explained, is that the plan would save money by decreasing the amount of tax savings high-income Americans could receive, in order to help cover the cost of health-care reform.

As for CTJ's own proposal to expand the Medicare tax?

Its plan to expand the Medicare tax would mean including Americans with unearned income, such as dividends and capital gains. Currently, the tax is limited to Americans reporting wages and earned income.

It "would impose the worker side of the Medicare tax -- the 1.4 tax -- to unearned income and then it would add a second rate of two and a half percent for very wealthy people and for elderly couples," McIntyre said.

He calls it "a low-rate tax," as the tax is lower than the total Medicare tax now, he says (2.9 percent when you account for the employer side). For most people, he believes this change would signify "virtually no tax at all."

Eighty percent of the tax hikes would be paid for by 5 percent of all taxpayers. "We do have very small tax hikes in other income groups, but they're not burdensome. For the bottom 60 percent for instance, the average tax hike would be less than 50 cents per week," he said.

The report's release is part of a broader campaign aimed at promoting cost-saving proposals to support health-care reform without burdening low-income Americans. CTJ has teamed up with the SEIU and USAction to promote its findings nationwide.

Ann Kempski, director of Health Policy at SEIU, said the numbers reported today "show members of Congress that they are fair and fiscally-responsible approaches to pay for the urgently-needed transformation that we need to make in our nation's health-care system."

Members of Congress "who say that we should wait, we should go slow, we should take only slow steps are actually saying to American workers to brace themselves for more hikes in their premiums, more hikes in their out-of-pocket costs, in fact, costs that could rise by 68 percent over the next 10 years if we do nothing," she said.

A copy of the report lives here.

By By Sarah Lovenheim  |  July 7, 2009; 3:44 PM ET

(See original post)

States such as New York are most likely to pay higher taxes to fund expanded coverage but have less to gain, policy analysts say.

July 06, 2009|Janet Hook

WASHINGTON — When Congress decides how to pay for President Obama's signature healthcare initiative, some of his strongest political bastions may be footing a heavy bill.

And in a political irony, states that went for Obama's Republican rival, Sen. John McCain of Arizona, in 2008 are among those likely to benefit most from Democratic healthcare policies.

Some of the "bluest" states that propelled Obama into the White House are among those most likely to pay more in taxes to fund expanded health insurance coverage and make other changes to the system, analysts say. People in states such as Illinois, New Hampshire, Massachusetts, Connecticut and New York have a higher share of wealthier taxpayers and residents who get generous healthcare plans through work -- and both sets of people may be tapped to raise money for the healthcare overhaul.

Moreover, those states have less to gain from a national effort to expand health insurance coverage because their residents already are more likely to have insurance than are Americans as a whole.

Those conclusions by a range of policy analysts may point to future tension in the healthcare debate: Though battle lines so far have been drawn largely in partisan terms, lurking regional divisions could fracture Congress even further.

"New York is going to be asked to pay a lot more taxes, and people in Iowa and Montana will not," said Robert Blendon, a professor of health policy at the Harvard School of Public Health.

Obama has proposed raising money for a healthcare overhaul by reducing the tax breaks available to high-wage earners, such as those for charitable giving and home mortgage interest. Another idea backed by some Democrats would tax the most generous health insurance policies provided by employers, which some have called Cadillac healthcare plans.

Regional differences may help explain why Senate leaders such as Max Baucus (D-Mont.) and Charles E. Grassley (R-Iowa), who are, respectively, the chairman and ranking minority member of the Finance Committee, are more enthusiastic about taxing employer-provided benefits, while House Ways and Means Chairman Charles B. Rangel (D-N.Y.) is cooler to the idea.

California ranks among the states whose residents would be most likely to pay higher taxes if Obama successfully limited tax breaks for high-wage earners. About 1.4% of taxpayers would face potential increases, according to a study cited by the group Citizens for Tax Justice. That places California among the top 15 most vulnerable states.

But employers in California as a whole do not offer particularly generous healthcare plans, according to data compiled by the Economic Policy Institute, so the state would not be among the hardest-hit if employer health plans were taxed.

When the policy institute assessed one proposal for taxing the most expensive health plans, which had been developed by a tax reform panel under President George W. Bush, it found that 36% of people with family plans in California would be taxed, compared with 41% for the nation overall.

In addition, California has a higher than average share of residents lacking health insurance, and so it might be among those to gain the most by expanding access to insurance. About 18.5% of state residents lack insurance, compared with 15.3% nationally, according to 2006 and 2007 data compiled by the Henry J. Kaiser Family Foundation, which studies health insurance trends.

To be sure, the precise effect of any healthcare bill is hard to assess before the details are known. And all states could benefit if the legislation succeeds in its goal of driving down healthcare costs.

Moreover, many people see improving access to health insurance as a broad national goal. "Everybody will benefit from universal coverage -- in red states and blue states," said Judith Feder, a professor of public policy at Georgetown University and senior fellow at the liberal Center for American Progress.

Still, the basic concepts Congress is considering could affect some regions more than others. So far, regional fault lines in Congress have been more pronounced in the debate over other issues, such as Obama's efforts to crack down on greenhouse gas emissions to slow climate change. But that may soon change as the debate gets more specific.

"Now the debate is mostly in the abstract," Blendon said. "But people soon will start saying: 'What will this mean for New York, L.A. and Philadelphia?' "

Critics of taxing higher-cost employer health plans say that it would hit many people who happen to live where costs are higher than average, not necessarily those whose packages are overly generous.

That is why the idea of taxing the priciest health benefits could run into resistance from lawmakers representing high-cost cities such as Chicago and New York.

"It doesn't have to do with Cadillac benefits; it has to do with geography," said Brian Biles, a professor at George Washington University and a former aide to the House Ways and Means Committee. "A package with this in it would attract strong opposition from members of Congress in the high-cost areas."

--

janet.hook@latimes.com