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Obama OKs Taxing High-End Health Plans; Married Couples Will Pay Much More

 

AP sources: Obama OKs taxing high-end health plans

By ERICA WERNER, Associated Press Writer Erica Werner, Associated Press Writer

WASHINGTON – President Barack Obama signaled to House Democratic leaders Wednesday that they’ll have to drop their opposition to taxing high-end health insurance plans to pay for health coverage for millions of uninsured Americans.

In a meeting at the White House, Obama expressed his preference for the insurance tax contained in the Senate’s health overhaul bill, but largely opposed by House Democrats and organized labor, Democratic aides said. The aides spoke on condition of anonymity because the meeting was private.

House Democrats want to raise income taxes on high-income individuals instead and are reluctant to abandon that approach, while recognizing that they will have to bend on that and other issues so that Senate Majority Leader Harry Reid, D-Nev., can maintain his fragile 60-vote majority support for the bill.

Pelosi and four committee chairmen met with the president Wednesday as they scrambled to resolve differences between sweeping bills passed by the House and Senate. The aim is to finalize legislation revamping the nation’s health care system in time for Obama’s State of the Union address early last month.

Despite the dispute over the payment approach, Pelosi, D-Calif., emerged from the meeting expressing optimism.

“We’ve had a very intense couple of days,” Pelosi said. “After our leadership meeting this morning, our staff engaged with the Senate and the administration staff to review the legislation, suggest legislative language. I think we’re very close to reconciliation.”

Congressional staff members stayed at the White House into the evening to continue work and a conference call of the full House Democratic caucus was scheduled for Thursday.

 

Married Couples Pay More Than Unmarried Under Health Bill

By MARTIN VAUGHAN

WASHINGTON — Some married couples would pay thousands of dollars more for the same health insurance coverage as unmarried people living together, under the health insurance overhaul plan pending in Congress.

The built-in “marriage penalty” in both House and Senate healthcare bills has received scant attention. But for scores of low-income and middle-income couples, it could mean a hike of $2,000 or more in annual insurance premiums the moment they say “I do.”

The disparity comes about in part because subsidies for purchasing health insurance under the plan from congressional Democrats are pegged to federal poverty guidelines. That has the effect of limiting subsidies for married couples with a combined income, compared to if the individuals are single.

People who get their health insurance through an employer wouldn’t be affected. Only people that buy subsidized insurance through new exchanges set up by the legislation stand to be impacted. About 17 million people would receive such subsidies in 2016 under the House plan, the Congressional Budget Office estimates.

The bills cap the annual amount people making less than 400% of the federal poverty level must pay for health insurance premiums, ranging from 1.5% of income for the poorest to 11% at the top end, under the House plan.

For an unmarried couple with income of $25,000 each, combined premiums would be capped at $3,076 per year, under the House bill. If the couple gets married, with a combined income of $50,000, their annual premium cap jumps to $5,160 — a “penalty” of $2,084. Those figures were included in a memo prepared by House Republican staff.

The disparity is slightly smaller in the Senate version of health-care legislation, chiefly because premium subsidies in the House bill are more targeted towards low-wage earners.

Under the Senate bill, a couple with $50,000 combined income would pay $3,450 in annual premiums if unmarried, and $5,100 if married — a difference of $1,650.

Republicans say the effect on married couples whose combined income makes them ineligible for subsidies is even greater — up to $5,000 or more — but that is more difficult to measure because it includes assumptions about the price of insurance policies.

Democratic staff who helped to write the bill confirmed the existence of the penalty, but said it cannot be remedied without creating other inequities.

For instance, they said making the subsidies neutral towards marriage would lead to a married couple with only one bread-winner getting a more generous subsidy than a single parent at the same income-level.

“The Finance Committee, along with other committees in the Senate, took pains to craft the most equitable overall structure possible, and that’s what we have here,” said a Democratic Senate Finance Committee aide.

If the bill passes in its current form, it would be far from the first example of federal and social benefits creating incentives to remain single. Under current law, marriage can have a negative impact on a person’s ability to claim the earned income tax credit and welfare benefits including food stamps.

In any progressive system of taxes or benefits, there are trade-offs between how well-targeted a subsidy is and how equitable it is, said Stacy Dickert-Conlin, an economics professor at Michigan State University.

“You might like to have it be progressive, equitable and marriage-neutral. But you have to decide what your goals are, because you can’t accomplish all three,” she said.

The marriage penalty in the health bill has not been a major focus of attack by Republican opponents of the bill, who are focusing on larger themes such as new taxes in the bill and growth in government spending.

But it has caught the attention of some conservative groups, who claim that the prospect of reduced subsidies will dissuade people from tying the knot.

“This seems to not only penalize the married, but also those who would have the most to gain from marriage — the poor,” said Jenny Tyree, an analyst at the Colorado-based Focus on the Family.

Ms. Dickert-Conlin said that isn’t borne out by research in the area.

“Most of the literature says that people do not make decisions about whether or not to get married based on” government benefits, she said.

“You might see bigger effects on the timing — someone choosing to get married in January, instead of December,” she said.

Write to Martin Vaughan at [email protected]