House leaders discuss taxing insurers to help finance health care

House Democrats have nearly completed drafting a health reform bill that consolidates versions created by three committees, Bloomberg reports. One detail remains undecided, however: How, exactly, Democrats will pay for the overhaul. "The lawmakers yesterday scaled back a proposed surtax on the wealthiest Americans, said Representative Sander Levin, a Michigan Democrat. At the same time, House Speaker Nancy Pelosi said she's considering a levy on health insurers' profits."

An industry group spokesman reacted, saying, "What windfall profit? The insurance industry profits are in line or less than almost any other industry." Bloomberg reports that three major insurers had margins of 3.8, 4.1, and 4.5 last year (Rowley and Jensen, 10/9).

The Wall Street Journal: "The tax would be similar to a proposal in legislation pending before the Senate Finance Committee, although lawmakers said specifics of the tax haven't yet been discussed." The Senate version would raise $6 billion a year, to be split by insurers based on their market share (Vaughan, 10/8).

CQ Politics: The proposal would resonate in the Democratic Caucus because "drug makers, hospitals and doctors have agreed to financial arrangements to help pay for Democratic health care proposals, while the private insurers have balked. Additionally, insurance companies are expected to benefit greatly from a new requirement on individuals to purchase coverage, and Democratic leaders have focused on insurance company profits" (10/8).

Bloomberg: A separate story explains that the House Democrats cut $84 billion from an earlier proposal to tax wealthy people, meaning they have to come up with a way to make up some of the difference elsewhere. They originally planned to tax people earning $350,000 a year to raise $544 billion over a decade. Now, they will tax only those earning $500,000 and more, raising an estimated $460 billion over a decade (Donmoyer, 10/8).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.