Daschle Sees Movement on Taxing Health Benefits

By Caitlin Taylor

Jun 29, 2009 10:17am

ABC News’ Rick Klein reports: Former Sen. Tom Daschle indicated today that he believes a sweeping health reform measure is likely to include a new tax on at least some health care benefits, adding to a sense of momentum around a politically controversial financing option. Daschle — President Obama’s one-time choice for Health and Human Services secretary and still a key player on health care reform efforts — told reporters at a briefing in Washington that Democrats have to be ”willing to show some flexibility” in finding ways to pay for a reform effort that could cost as much as $1.5 trillion or more over 10 years. “Obviously we want to do as much as we can to keep the commitments we’ve made to working Americans,” Daschle said. But, he added, “There’s a limit to how much we can provide that assurance.” “At some point, if you really want to get this done, you’ve got to be willing to show some flexibility, but hold as true as possible to the principles you outlined at the beginning,” he added. On the campaign trail last year, Obama blasted Sen. John McCain’s proposal to subject all health care benefits provided by employers to taxation. Such benefits are not taxed under current federal law. Major labor organizations are adamantly opposed to taxing health benefits, arguing that such a change would negatively impact workers.  Obama also pledged repeatedly not to raise any taxes on those making less than $250,000 a year — a promise that’s far more difficult to keep if he pays for health reform in part by taxing health care benefits. On ABC’s “This Week” Sunday, senior White House adviser David Axelrod refused to rule out imposing taxes on health benefits, while making clear that’s not the president’s preferred option.  “The president had said in the past that he doesn't believe taxing health care benefits at any level is necessarily the best way to go here. He still believes that," Axelrod told George Stephanopoulos. “But there are a number of formulations, and we'll wait and see. The important thing at this point is to keep the process moving, to keep people at the table, to the keep the discussions going. We've gotten a long way down the road and we want to finish that journey."  Daschle today said Democrats’ plans are far different than McCain’s in that they would only impact so-called “gold-plated,” high-end health plans, which are typically offered only to well-compensated employees. “We’ve said you can’t eliminate the exclusion — nobody’s saying that, at least on our side,” said Daschle, D-S.D.  “At what level does it become gold-plated? That’s part of the debate.” Daschle comments came as the liberal Center for American Progress — where he serves as a senior fellow — released a report today outlining ways to pay for a health care reform package it estimated would cost between $1 trillion and $1.5 trillion over 10 years. The group is proposing that a third of the money come from new revenues — such as a new tax on health benefits — with a third coming from savings inside government health care programs, and the final third via “modernization” efforts that would make the health delivery system more efficient. The center’s president and CEO, John Podesta, said that he’s growing more optimistic that Congress will be able to complete work on a health care overhaul this year. “Better than 50-50 chance is maybe even a little bit understated,” Podesta said. “This period of time [before the August recess] is critical.” Daschle is also backing a proposal — developed by the Bipartisan Policy Center — that would delay a federal “public option” for health coverage for at least five years. That window of time would allow states to step in and develop their own plans — and would duck a politically explosive debate over whether private insurers should be forced to compete with a health insurance plan run by the federal government.  Daschle, a former Senate majority leader, said he still believes that a public option is the best way to go, but recognizes that most Republicans view that as a non-starter. He said, however, that Senate leaders retain the option of using obscure budget rules to press ahead with health reform; in that case, they’d need only 51 votes, a threshold they could reach with only Democrats on board. “I don’t think public option is dead at all. I think it’s very much alive. There’s strong support in the Democratic caucus. I think it’s very doable,” Daschle said.UPDATE: With Daschle giving more ground publicly than Obama or his top advisers, Richard Wolffe poses an intriguing question: “Has Daschle Gone Rogue?”
Writing at The Daily Beast, Wolffe — who recently published a book on Obama and his presidential campaign — quotes a “senior Obama aide”: “Everyone loves Daschle. . . . But he’s making compromises we don’t want to. We just take a different view right now.”


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