A majority of House Democrats say they will oppose a tax that hits the highest-value health plans, known as “Cadillac” coverage, offered by insurers. The opposition, spelled out in a letter sent to House leaders, throws into doubt one of the key revenue-raisers in a bill written by the Senate Finance Committee and hints that a behind-closed-doors effort to merge several bills could become a nasty fight.
Tax on 'Cadillac' coverage tax runs into opposition
Under a provision in the Finance Committee's bill, insurance companies that offer overly generous health plans will be hit with a 40% excise tax. Rep. Joe Courtney (D-Conn.), who authored the letter signed by 157 Democrats, called such a measure “a nonstarter.”
For now, the House plans to pay for its legislation, priced at roughly $900 billion, with a surtax on the wealthy. But that proposal didn't sit well with a number of senators, who instead have favored a number of smaller taxes and industry fees to pay for health reform.
Congressional accountants estimate that the Finance provision, which levies a 40% excise tax on plans with values in excess of $8,000 for individuals and $21,000 for families, would raise $205 billion over a 10-year period. Opponents, however, argue that the tax would ultimately hit the middle class, adversely affect union members and strain small businesses.
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