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Conrad: Polls Show Taxing Health Benefits a Clunker

By John Reichard, CQ HealthBeat Editor

July 7, 2009 -- Senate Finance Committee member Kent Conrad told reporters Tuesday that the panel is looking hard for alternatives to taxing health care benefits in light of polling over the July Fourth congressional recess showing the public is cool toward that approach to financing a health overhaul.

The North Dakota Democrat said the polling shows that most of the public is opposed to such taxation, with disapproval "in the 70 percent range." But he indicated that the polling may not be a true measure of levels of public support for such taxation because most people aren’t aware of the dollar value of their health care benefits.

The committee is eyeing taxation at benefit levels that may not affect most Americans. The idea of taxing benefits above 110 percent of the federal health care benefits level "certainly remains a significant option," Conrad said. "But we’re looking at other options because of what we see" in the polling. "When you go out and ask people across the country their initial reaction. . .is they don’t like it."

Conrad said that the committee is discussing approaches to increasing revenues that it hasn’t considered before. While committee leaders have said they want to keep revenue-raising options within the health care sector, financing challenges appear to be forcing a change in that strategy. "Some are in the health care [sector], some outside," he said of the new approaches after leaving a luncheon in the Capitol with fellow Democrats.

Senate Finance Committee Chairman Max Baucus, D-Mont., is under pressure to unveil a proposal this week or early next week if his panel is to successfully mark up a package in time for it to be blended with a Senate Health, Education, Labor and Pensions Committee package so that the Senate can approve health overhaul legislation before the August recess. Baucus declined Tuesday to predict when his "chairman’s mark" will be ready.

Alternative methods of taxation to limiting the "exclusion" of employer-paid health insurance premiums from individual income taxes may make it much harder to attract any Republican votes for an overhaul package.

Meanwhile, the White House is scrambling to sign agreements with industry groups to accept cuts in Medicare and in some cases Medicaid payments to finance an overhaul plan. Industry sources say the hospital industry is on the verge of announcing such an agreement totaling $155 billion in cuts over 10 years. An industry lobbyist said the Finance committee and the White House are discussing an agreement with health insurers that would trim $125 billion over 10 years in payments to Medicare Advantage plans, the private health plans in the Medicare program.

Robert Zirkelbach, a spokesman for the insurance lobby America’s Health Insurance Plans, was noncommittal about such discussions. "There is no deal. . .or timetable," he said when asked about the figures cited by the lobbyist. "We’re going to continue to do what we can to contribute to this process" of overhauling the health care system, he said.

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