Tax News

CCH (cch.taxgroup.com) reports:

  Bracing themselves for a long Senate health care reform debate, President Obama's chief budget and health care reform advisors on November 25 argued that the pending legislation meets the administration's four key criteria for being a fiscally responsible bill. The Senate package: (1) is deficit-neutral; (2) raises revenue by imposing an excise tax on insurers of high-end ("Cadillac") health care policies; (3) establishes an independent commission to improve health care quality and rein in Medicare health care expenditures; and (4) implements delivery system reforms, noted Office of Management and Budget (OM Director Peter Orszag.

  The tax on insurance companies offering Cadillac health plans aims to curtail private insurers' premium increases and encourage employers to seek higher-quality and lower-cost health benefits, Orszag noted in a conference call with reporters. He cited an analysis of the Senate Finance Committee proposal by leading economists who estimated the excise tax would increase workers' take home pay by more than $300 billion over 10 years, or approximately $173 annually per family.

  The findings were included in a letter to President Obama on November 17 from 23 leading economists, including Alice Rivlin, Robert Reischauer, Mark McClellan, and Laura D'Andrea Tyson. "As economists, we believe that it is important to enact health reform, and it is essential that health reform include these four features that will lower health care costs and help reduce deficits over the long term," Henry Aaron of the Brookings Institution stated in the letter.

  By Paula Cruickshank, CCH News Staff