Deal Reached on Taxing 'Cadillac' Plans
The excise tax on high‐cost insurance plans has been one of the biggest sticking points in the negotiations, as President Obama has favored the Senate plan which calls for the tax, while House Democrats preferred raising taxes on high‐income earners.
A senior Democratic official speaking on background told Fox News that the threshold for exemption would be raised from $23,000 to $24,000 per family but would remain the same at $8,500 for singles with high‐value plans. Dental and vision plans would be removed from that calculation, however.
State and local workers and union members are exempted until 2017. A Democratic source with close union contacts said labor leaders are not particularly happy with the tentative deal, but are much less angry than they were at the previous plan.
The new plan was not accompanied by an explanation to how much revenue would be generated by the new figures.
The value of the plans that are taxed would be indexed to the consumer price index plus 1 percent, meaning over time more and more people would be affected by the threshold than would be if the tax had been indexed to health care inflation. Health care spending in 2008, the last year for which the Centers for Medicare and Medicaid Services has data, rose at a historically low rate of 4.4. percent. Inflation was at 6 percent in 2007.
The White House did not comment on the deal on Thursday, with White House Press Secretary Robert Gibbs saying only that on Wednesday the president and Democratic members of Congress "made a tremendous amount of progress in bridging the differences that existed between the two pieces of legislation that have passed the House and the Senate."
"We may have more later in the day," Gibbs said.
The deal must be vetted with rank‐and‐file members but the agreement would appear to be a major win for Senate Democrats.
Original Source URL: http://www.foxnews.com/politics/2010/01/14/deal‐reportedlyreached‐taxing‐cadillac‐plans/