June 24th, 2009
05:36 PM ET
14 years ago

Tax on health benefits likely, key senators say

WASHINGTON (CNN) - A controversial new tax on employer-provided medical benefits is gaining traction among Senate health care negotiators as a way to help pay for a $1 trillion reform package moving through Congress, two key senators said Wednesday.

Bipartisan Senate negotiators are "starting to coalesce" around the idea, according to Senate Finance Committee Chairman Max Baucus, D-Montana.

Any tax is controversial - but this proposal is especially politically charged, since President Barack Obama opposed the idea when he ran for president. White House officials from the president on down have sent mixed messages in public in recent weeks about whether he'd accept such a tax.

Baucus says the president has told him he is "flexible" on the proposal.

Leaving a closed-door negotiating session on health reform, Sen. Kent Conrad, D-North Dakota, said, "It's hard for me to see how you have a package that is paid for that doesn't include" the new tax.

Sen. Charles Grassley, R-Iowa, said the tax would be based on the value of a federal employee's health benefits package plus 10 percent, meaning a family of four would pay income tax on health benefits valued at more than $17,000. Currently employer-provided health insurance is tax-free, regardless of its value.

Baucus and Conrad also said they are considering other tax increases not related to health care, including an early proposal form President Obama to reduce tax deductions for wealthier people. Many lawmakers panned the idea when Obama first floated it.

"That's on the table and variations on the theme are on the table," Conrad said.

"There's no free lunch," Baucus said, when asked about other options.

Filed under: Health care • Kent Conrad • Max Baucus
soundoff (3 Responses)
  1. samuel

    This is just stupid! We need to put common sense back in government.

    June 24, 2009 05:47 pm at 5:47 pm |
  2. Mike, Syracuse, NY

    Yet another step in Obama's massive redistribution of wealth scheme. As Margaret Thatcher once said: "The problem with socialism is that eventually you run out of other people's money".

    June 24, 2009 05:48 pm at 5:48 pm |
  3. Larry Crum

    They want to tax me for holding a job for 35 years that partly paid mYheath insurance, to pay for ones that dont work. And lay up on welfare that Iam already paying taxes for. I don't think this is a very fair deal.

    June 25, 2009 01:53 am at 1:53 am |