Funding Options Considered For Health Care Reform

As Congress wraps up its recess, Democrats already are considering ways to fund the sweeping changes proposed for the health care system that will be tackled when the House and Senate are back in session.

One top Democrat says the money could come from a combination of taxes proposed in the versions of the bills proposed by each legislative body.

The version passed before the House left on its break has one funding source come from cutting Medicare spending. Also, individuals who earn more than $500,000 annually and families who earn more than $1 million would have to pay an income tax surcharge of more than 5.4 percent. The House estimates its entire plan would cost $1 trillion.

In the Senate bill, Medicare costs would be reduced by $500 billion. Also, insurance companies that issue so-called “Cadillac” health care plans worth more than $8,500 for individuals and $23,000 for families would face a 40 percent tax. The Senate measure carries a price tag of $871 billion.

The chairman of the House Energy and Commerce subcommittee on Health said a combined plan might result in the proposed taxes being changed somewhat before the final legislation is drafted.

Supporters of the “Cadillac” taxation plan contend it likely is one of the best ways to keep medical inflation in check. But House Democrats don’t favor such taxation because it would be a financial hit to union members who opted for better health benefits instead of pushing for higher pay in their contracts.

Members of the House are back on the job Tuesday while the U.S. Senate reconvenes Jan. 19. What they have to deal with when they return could be the largest increase of federal health guarantees since Medicare and Medicaid began in the 1960s.

The plan by Democrats has been to forward the final version of health care reform legislation to President Obama for approval in early February, timed to the president’s State of the Union address. House Speaker Nancy Pelosi has said the deadline might not be met.

Sources say the president and Democratic leaders from Congress last week agreed to skip a formal House and Senate conference to blend the two versions of the plan into one. Instead, there will be informal negotiations in order to hold back any delays by Republicans.

Speculation is the Senate version of the bill likely will be more favored and the liberal Democrats in the House likely will have to adjust. Even the often obstinate Democratic caucus of the Senate will have to reach agreement within its own ranks to form a united front that can deal with any Republican opposition.