Obama Administration Pushes for Wealthy Tax Hike to Fund Health Care Overhaul

Strategic Insights -

President Barack Obama's administration has stepped up efforts to influence health care legislation, urging lawmakers to consider taxing the wealthy instead of workers to fund a health care overhaul. The push comes as House Democrats discuss a new plan to require health insurance for most Americans, with an outline of the proposal obtained by Bloomberg News suggesting a tax penalty for those with adequate financial resources who don't elect to get insurance.

Key Takeaways:

  • The Obama administration is advocating for a cap on tax deductions for high-income Americans, rather than a broad-based levy such as a Senate proposal to tax some employer-provided health benefits.
  • David Axelrod, a senior advisor to the president, stated on CNN's "State of the Union" that Obama made a "very strong case" for the proposal to cap deductions for high-income Americans.
  • Austan Goolsbee, another senior advisor, appeared on "Fox News Sunday" and clarified that Obama never proposed taxing employee benefits, emphasizing that he is "mindful" of how "ordinary Americans are able to foot the bills."
  • The proposed plan would require Americans to have insurance, with some exceptions, and exempt those who can prove they can't find an affordable policy.
  • The outline suggests that consumers who have individual health insurance policies that they like could keep them, but "by and large" the nation's market for individually purchased health insurance policies would move to a new federally operated exchange.
  • Individuals and employees of small firms would be permitted to buy policies at less expensive group rates through the exchange.
  • States would have the option to run a state exchange, but the default would be a national exchange.

Statistics:

  • The outline obtained by Bloomberg News suggests that the new plan would require Americans to have insurance, but the exact percentage of the population that would be affected is not specified.
  • According to the outline, consumers in the individually purchased health insurance market would be required to transition to a federally operated exchange, but the timeline for this transition is not specified.
  • The plan would permit both individuals and employees of small firms to buy policies at less expensive group rates, but the estimated cost savings is not specified.
  • The Obama administration is pushing for a cap on tax deductions for high-income Americans, but the exact amount of revenue generated from this proposal is not specified.

Sources:

  • "Obama Urges Cap on Tax Deductions as Budget Deal Looms." Bloomberg News Washington.
  • Axelrod, David. Quoted on CNN's "State of the Union." July 19, 2009.
  • Goolsbee, Austan. Quoted on "Fox News Sunday." July 19, 2009.
  • Bloomberg News. "House Democrats to Consider New Health Care Plan." July 19, 2009.