Obama Backs Cadillac Health Plan Tax, Again : Shots - Health News House and Senate negotiators have reached a tentative compromise on the so-called Cadillac tax on health plans with very generous benefits. The deal, though important, is just one step among many needed to finalize an overhaul bill.
NPR logo Obama Backs Cadillac Health Plan Tax, Again

Obama Backs Cadillac Health Plan Tax, Again

President Obama reaffirmed his support for the so-called "Cadillac tax" on high-end health plans more directly to Democratic Leaders in a meeting yesterday. He stated his position to NPR in an interview last month.

"Cadillac" health care plans tend to offer cushy benefits. iStockphoto.com hide caption

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"Cadillac" health care plans tend to offer cushy benefits.


While he recently acknowledged the bill will be paid for by a combination of House and Senate tax options, the process of making that happen is not going to be anything like cruising the strip on a Saturday night.

How to finance health care has been a particularly divisive issue in Congress, and even among Democrats themselves. It is one of the key issues up for negotiation between the House and Senate health care bills, along with abortion and the public option.

Senate Democrats and some White House officials have pushed for the tax, which many economists say would help curb costs by encouraging people and employers to choose leaner insurance plans.

But the Cadillac tax proposal continues to raffle many Democrats' key union supporters, who say the tax would unfairly affect their people, may of whom have given up wage increases for better health care, and many in the middle class.
The tax proposal has especially stung the Communication Workers of America who commissioned a report arguing against it. This has lead House Democrats to largely oppose the proposal.

On the other hand, many Senate Democrats oppose the House financing plan, which relies largely on new taxes for top wage earners.

Reconciling the financing issue was sure to be a huge headache for even the most veteran negotiators on the Hill and now the stress is showing, especially among Democrats.

Reportedly, Speaker of the House Nancy Pelosi's Pelosi, D-Calif., is "miffed with Obama's tilt toward the Senate plan."

When asked about President Obama's campaign trail promise to conduct the health care debate in public view, Pelosi said, "There are a number of things he was for on the campaign trail." Democratic aides explained that she was responding to his siding with the Senate 's financing version by alluding to his campaign promise not to tax the middle class.

But the political reality is that the House has more votes to spare than the Senate, and that means a Cadillac tax is likely to be in the final version of the bill in some form, despite the protests.