Quantcast

Upfront costs complicate Obama's health care plan

Associated Press | 5/13/2009, 5:52 a.m.

Yet those kinds of changes take time — perhaps several years or even the better part of a decade.

The money to cover the uninsured will be needed right away, about $125 billion to $150 billion a year.

That leaves hard choices for lawmakers and Obama.

Baucus favors requiring individuals to get health insurance, which will help. But he also supports subsidies for people who can’t afford coverage — a cost to the government.

To help close the money gap, Baucus is open to some limits on the current tax-free treatment of employer-provided health insurance.

Health benefits are considered part of an employee’s compensation, but are not taxed. If all health insurance were taxed like regular income, the government could raise an additional $250 billion a year.

In the campaign, Obama opposed tampering with tax-free employer-based health care, saying it would undermine the system that delivers coverage to most people. Other prominent Democrats agree.

Asked if he would support taxing benefits, U.S. Rep. Charles Rangel, D-N.Y., the top tax-writer in the House, simply said: “No way!”

Baucus says doing away with the tax break altogether would cause harm, but some limitations might curb waste in the system. Obama’s aides say he’s still opposed, but willing to consider any serious proposals from Congress.

Obama’s opposition to taxing employer-provided health insurance isn’t the only campaign position he might have to jettison to pay for health care.

He once criticized his chief Democratic presidential rival, Hillary Rodham Clinton, for proposing that everyone in the U.S. be required to have medical insurance. Yet such a mandate probably will be in what Congress puts together because requiring individuals to pay would lower federal costs.

For Obama, there are no easy ways to pay for health care. Options include raising other taxes, cutting deeply into Medicare payments to providers, or phasing in the expansion of coverage for the uninsured — beyond his four-year term.

Associated Press writer Erica Werner contributed to this report.

(Associated Press)