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Is President Obama Considering Taxing Health Care Benefits?

March 15, 2009 6:16 PM

The New York Times today reported today that the "Obama administration is signaling to Congress that the president could support taxing some employee health benefits, as several influential lawmakers and many economists favor, to help pay for overhauling the health care system."

The report was used by Republicans to paint the Obama administration as hypocritical, because then-candidate Obama hammered Sen. John McCain, R-Ariz., for making a similar tax proposal during the campaign to help fund his health care proposal. "Taxing your health care benefit," then-Sen. Joe Biden, D-Del., said during the campaign. "I call that the ultimate 'Bridge to Nowhere.'"

Then-Sen. Obama ran a TV ad against McCain on the idea saying, "McCain would impose a new tax on health benefits, taxing your healthcare for the first time ever. It's a multi-trillion dollar tax hike. The largest middle class tax increase in history."

McCain wrote on his twitter page today, "Sunday Show Roundup: Obama Admin now agree to taxing some employer health benefits, sound familiar?"

But Obama administration aides immediately characterized the Times report as much ado about very little, saying the idea is on the proverbial table along with nearly every health care reform idea under the sun, but not being pushed or particularly supported by the White House.

"I saw this, the article you're talking about," White House economic adviser Austan Goolsbee said on "Fox News Sunday." "I thought that was highly overstated. That is not in the president's budget. The president's budget -- you have it there on the table. It does not include this provision. This appears to be coming from (when) the administration and representatives of the administration went to Congress and said, 'We are open to all ideas to talk about health reform.'"

Goolsbee noted that "there are some people in Congress who are pushing this, but that is not the president's idea."

The Times report cites as evidence of this "signaling" of a willingness to consider the idea testimony from Office of Management and Budget director Peter Orszag who told the Senate Finance Committee, according to the Times, that the "idea" "most firmly should remain on the table."

Orszag made those comments on March 10, referring to three ideas mentioned by Sen. Ron Wyden, D-Ore.: insurance market reform, making tax rules progressive rather than regressive, and requiring some personal responsibility for, for instance, uninsured taxpayers who make more than $60,000 a year.

"Again, at this point, I think everything, including those three, most firmly, should remain on the table," Orszag said.

Earlier in the hearing the OMB director had said "with regard to benefits and coverage we want to leave everything on the table at this point to allow the process to play out. So you should not expect and you will not be receiving definitive answers from me on exactly what the administration does or does not favor on the benefits-and-coverage side of health reform."

In fact, the notion of everything being on the table came up so often, the chairman of the committee, Sen. Max Baucus, D-Mont, asked toward the end of the hearing, "Is there anything off the table as far as the administration is concerned?"

"Not to my knowledge, no," Baucus said. "Everything is on the table."

"Okay," Baucus said, "It's a pretty big table, and stacked pretty high."

At a different hearing on March 4, Treasury Secretary Tim Geithner -- confronted with opposition to the Obama administration's proposal to reduce tax rates for itemized deductions for people who make more than $200,000 a year -- said when asked about taxing health insurance benefits, "One of the principles in the president's budget is, again, to try to preserve our employee-based health-care system. As you know from his comments during the campaign, that's a very important part of his system. We'd like to preserve that."

That said, Geithner continued, "we recognize there are other ways to do this. And we want to work with you on how best to put together an effective package of reforms that's fiscally responsible that meets the president's broad principles."

Asked today if the president is open to the idea, Goolsbee said, "he is open to all ideas. He said, 'Let's put all ideas on the table.'" Taxing health insurance benefits, he went on, "is not the president's idea.  It's not in his health plan.  It's not in his budget."

On NBC's "Meet the Press", Obama White House Dr. Christina Romer, chair of the Council of Economic Advisers, was asked if the President remains opposed to taxing health care benefits as he was during the campaign.

"He is still opposed to it," Romer said. "He certainly was very critical and very skeptical of it.  It is certainly not in our proposal.  And we have proposed other ways to deal with health care and to fund it.  And so no, it is not something that he supports…His skepticism from the campaign absolutely is, is still there."

Romer refused, however, to say the idea was "off the table."

On CBS' "Face the Nation", National Economic Council director Larry Summers was asked about "reports that the president may now favor taxing health care benefits."

"That's not in the president's proposal," Summers said. "The president's laid out his principles for judging whatever we do to emphasize lower costs and higher quality, to emphasize allowing people who got a good relationship with their employer in terms of health insurance to continue to continue that relationship. Those are the president's principles. He's put forth his proposal….Different things will come out of the Congress, but the president has put forth his proposal and his principles."

- jpt

March 15, 2009 | Permalink | Share | User Comments (97)

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bct said " A 95 year old relative died last year after 3 weeks in the hospital for pneumonia and other related illnesses. Her bill was over $90K all paid for by Medicare. " Her bill may have been over $90K, but the hospital sure didn't get paid that. Assuming the DRG assigned was DRG 89 Simple Pneumonia & Pleurisy age >17 w/ CC (comorbid. & complications) then the hospital received approximately $4,000 for that stay. Since the average length of stay for that DRG is 4.78 days, and she was in for 3 weeks, the hospital would probably receive a little extra money for her stay being an outlier. Another thing is that with other diagnoses, she may have ended up in a slightly higher DRG. With additional payments, the hospital MAYBE got $7,500 at the most.... meaning they would write off $82,000. Based on my experience in health care cost accounting, the actual cost for the stay (including overhead, etc.) was probably $50-60K.

Posted by: ellsbells | Mar 16, 2009 6:44:13 PM

"By the way, last time I looked, Harvard Law School was very hard to get into, and becoming editor of their famous Law Review is reserved for the absolute best and the brightest."

Have you ever heard of Affirmitive Action? Obama isn't all that samart. How come there is no proof of anything he's down while editor of the Law Review. He was not very memorable at Harvard at all.

Posted by: Nan | Mar 16, 2009 4:09:47 PM

It wasn't more than a week ago that Gibbs was saying Single-Payer -- what everyone outside the elites WANTS -- IS "off the table". It's pretty clear this gang is dithering on everything, and lying about most things.

Meanwhile, they're following Bush on the non-person status of those detained at Guantanamo, on wiretapping, on executive privilege ... AND unleashing the online brown-shirts to agitate for passage of the "Democratic" budget.

For those who can, it's time to emigrate.

Posted by: Pants on Fire | Mar 16, 2009 12:20:58 PM

Another tax on a demoralized citizenry in the middle of a major depression? WHAT?!? Oh, wait a minute, Obama did say just a few days ago that the fundamentals of the economy are sound. I guess he said that just so we'd all think the economy is getting better and be willing to pay his little tax with no complaints.

Uggghh. Hit by Obama again.

Posted by: NPage | Mar 16, 2009 11:58:47 AM

Gee, you mean this Obama guy isn't what he portrayed himself to be during the campaign? Get OUT!!!!!! Totally shocked!

Posted by: Obama, the second coming | Mar 16, 2009 10:41:27 AM

This makes very little sense to me. I think we can fund healthcare without this by: (1) Eliminating the income limit on Social Security taxes; (2) Expand eligibility for the Federal Employees healt ins program by allowing small businesses to pick up a percentage of the Federal govt contribution (e.g. pay 50=80% of what the government pays) and have the employees pick up the rest; (3) Any company that achieves 100% coverage of its emloyees gets a tax credit = 20% of its contributions in addition to deducting its payments as a business expense; (4) Congress repeals its separate health care plan for itself and its staff to return to the Fedral system; (5)Medicaid funding can be used by states to purchase insurance to cover the poor or directly fund treatment at their option based on whatever is cheaper. This gives everyone bargaining power with insurers and avoids leaping into single payer systenms, builds on something that exists and works and eliminates Congress' opt out for a better plan from several years ago to make good on what both candidates said about getting everyone coverage as good as they got as Senators.

Posted by: dem-dog | Mar 16, 2009 10:13:37 AM

Quick tangent here - but what exactly caused the downfall of our formerly "elite" universities?
Quite seriously, I think it's because most rich smart, successful guys marry themselves off to dumb bimbo trophy wives like Sarah Palin - or marry into money.
At any rate, the majority end up with REALLY stupid kids. And so they lowered the standards (and continued lowering them) to make certain they could preserve their family legacy.

Anyway, the next time you hear a bailed out corporation relating how they MUST retain their "best talent" with billions of dollars in bonuses -

It's just a continuation of that same sense of entitlement. Junior needs his Ferrari to impress the high class hookers that pass for models in the fashion industry.

If you screw with that, you're tearing at the very fabric of our nation.

America's standing in the world rests on the reputations of America's wealthiest families.

Posted by: New Cronkite | Mar 16, 2009 9:55:12 AM

If President Pelosi wants something she will get it.
She makes the decisions and Obama doesn't have the guts to tell her no.

And how else will they afford their next spending spree?

Posted by: sammy | Mar 16, 2009 9:37:30 AM

Taxing health care, sure why not. We tax phones, gas, food, housing, purchases lets tax health care. In fact lets tax taxes. We can print more money and hand it out to everyone. Better still lets create a new business that just moves money around from one hand to the next, with each hand taking some away. At the end we will print more, wont this be a fun little game.

Posted by: Paul | Mar 15, 2009 8:35:30 PM

========================

In case you aren't aware, they plan to eliminate the claiming of last years taxes paid as a deduction, meaning that certain people will be paying taxes on their taxes....

Posted by: samhiguchi | Mar 16, 2009 9:32:42 AM

obama says he's not going to tax health care? and you believe him LOL sheeesh

Posted by: pink stocks are a scam | Mar 16, 2009 9:30:25 AM

[[Taxing Your Health Benefits]]

That's [[John McCain's & the Republican Party's]] Platform.


Yesterday, it was Rejected by Obama's Economic Adviser, as "Not Acceptable"...

Looking at this Proposal, does not mean...

Obama is Accepting this Proposal.
---------

Much Ado about... NOTHING

Call Me when that Happens.

Posted by: O. | Mar 16, 2009 9:29:14 AM

The moment all upper 3% taxpayers have been waiting for: The moment when all taxpayers (regardless of income level) realize that they are going to get it too!!!

Posted by: DontGet818OnMeNow | Mar 16, 2009 9:29:01 AM

5,000 people showed up for the Cincinnati tea party protest, yet the MSM fails to report.

Why? Protecting Obama? THAT'S NOT YOUR JOB!

Posted by: Michelle | Mar 16, 2009 9:27:47 AM

"By the way, last time I looked, Harvard Law School was very hard to get into, and becoming editor of their famous Law Review is reserved for the absolute best and the brightest."

Funny stuff :) Every Harvard grad I've EVER worked with has been a complete moron. I'm talking borderline mental retardation. Yet they graduate and are "entitled" to the best jobs in the country?

At any rate, congrats to Obama for scoring an Ivy League education - it's all the rage, what with corporate croneyism and the downfall of our inbred "free market for friends and family" capitalism.

Obama may have been the "head of the dunces" - but sadly, that's about as much prestige as you can bestow on that position these days. Sorry.

Posted by: New Cronkite | Mar 16, 2009 9:27:41 AM

I just really don't understand what's so hard about journalists looking at President Obama's comprehensive budget plan and figuring out what BARACK OBAMA supports.

For anyone with a different idea, the media needs to ask how THAT idea fits into a all-encompassing comprehensive budget plan.

To say that all ideas are on the table doesn't indicate in any way that President Obama actually SUPPORTS anything but his OWN plan. Right?

Since the GOP has no ideas of their own, they simply go around asking if Obama is open to this idea or that idea...

And the answer has always been:
"President Obama is open to ANY GOOD IDEA."

So doesn't it make sense to start with asking questions about the plan he's put out, rather than asking him about other people's ideas and what he thinks of them?

Or, doesn't it make sense to ask these people with other ideas, how their idea works into a comprehensive plan of their own?

I honestly haven't heard of a comprehensive budget plan from the GOP for next year's budget, never mind for a long-term budget plan like Obama has be willing to give us.

I don't think we elected President Obama just to listen to the minority GOP give us another barrel of their petty political whining and partisan carping.

The direction the majority of Americans want our nation to go is not the direction the GOP took us in for the last eight years, but is instead the complete OPPOSITE direction -- the direction that Barack Obama campaigned on.

President Obama's plan is comprehensive.
The GOP needs to come up with their own comprehensive budget plan, or else get out of Obama's way.

Posted by: Jan | Mar 16, 2009 9:17:40 AM

What if everyone tried to live within their means,Congress included.We the American tax payer should demand this!ABC news report abuse whether its Republican or Democrat,don't put your liberal slant on the news.Report it straight up.

Posted by: Johnny L | Mar 16, 2009 9:09:29 AM

Here's another. A family friend had a heart attack in London. He was treated and billed for the full tab and had to claim his insurance company in the U.S. What would have happened if he couldn't pay? In the U.S., Medicaid would have picked up the tab. How many indigent visitors are we paying for? Many more than Europe. Before you start taxes my benefits, get rid of excessive costs you can control. Stop mindlessly providing everyone with everything. And stop the lawyers from suing doctors and hospitals requiring them to not only take on expensive malpractice insurance but provide everything to everyone. The lawyers are a big root of all this.

Posted by: bct | Mar 16, 2009 8:49:09 AM

It's Pelosi and Reid that caused this mess. Time for them to go!!!!

Posted by: liberalview | Mar 16, 2009 8:47:51 AM

If the administration is really serious about healthcare reform and wants to ensure more people have basic care then they will have to deny care somewhere. A 95 year old relative died last year after 3 weeks in the hospital for pneumonia and other related illnesses. Her bill was over $90K all paid for by Medicare. I have a great aunt who is sharp as a tack at 101 and always lamenting that 'they just don't let people die anymore'. These are hard choices but if we want to control costs and provide more practical care, we need to start saying 'no'.

Posted by: bct | Mar 16, 2009 8:40:13 AM

Here's a textbook case of journalist getting played by the Republicans. The "fundemantals are sound" soundbite got so much play that they figured they could use the same ploy again (cue whisper in Tapper's ear...)
.
The problem is the double bind that the press themselves have deliberately set up. Snub the Republicans and he's failing at bipartisanship; Work with the Republicans and he's hypocritically embracing what he campaigned against.

You guys need to pick a story and stick to it. Otherwise it's ABC themselves who are shown to be the hypocrites.

Posted by: Paul Dirks | Mar 16, 2009 8:35:02 AM

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