Obama said to be open to taxing health benefits

[June 03, 2009]  WASHINGTON (AP) -- President Barack Obama is leaving the door open to taxing health care benefits, something he campaigned hard against while running for president, according to senators who met with him Tuesday.

Senate Finance Committee Chairman Max Baucus, D-Mont., raised the issue with Obama during a private meeting with the president and other Democratic senators and later reported the president's position: "It's on the table. It's an option."

The White House said later that Obama did not want to go that route.

"The president made it clear during the campaign that he has serious concerns about taxing health care benefits," Obama spokesman Reid Cherlin said in a statement. "He stated again his belief that health reform can't wait another year, and that while all options should be considered, those options should include the revenue proposals that he included in his budget."

The federal government would reap about $250 billion a year if it treated health care benefits given to employees like wages and taxed them.

Baucus and others are eyeing that money as they search for ways to pay for a costly health care overhaul that would extend coverage to 50 million Americans who are now uninsured. That could cost some $1.5 trillion over 10 years.

The president adamantly opposed health benefit taxes during the campaign, arguing they would undermine job-based coverage, and he criticized Republican presidential rival John McCain for proposing a sweeping version of the same basic idea. But since taking office he and members of his administration have indicated openness to almost all suggestions from Congress on health care, including taxing benefits.

Obama has made some suggestions of his own for paying for a health care overhaul, including cuts to Medicare and limiting tax deductions wealthy people can take, but they've run into opposition from Congress. And, they only add up to about $630 billion over 10 years.

Some experts think limiting the tax exclusion for health benefits is the only way to get the necessary money to pay for a sweeping health care overhaul. But there's opposition from organized labor and from many Democrats, including House Ways and Means Chairman Charles Rangel, D-N.Y., who said recently there was "no way" he would support the approach.

Baucus wants to look at limiting -- but not entirely eliminating -- the tax-free status of employer-provided health benefits.

"It was not in our plan, it was not in our budget," White House budget director Peter Orszag said earlier Tuesday. "We are saying we want the legislative process to play out, and that's all we have to say on that right now."

Obama is leaving the details of crafting a health care bill to Congress and used Tuesday's meeting to urge senators to swift action.

"This window between now and the August recess I think is going to be the make-or-break period," Obama said before the meeting was closed to reporters. "This is the time where we've got to get this running."

Baucus' Finance Committee and the Senate Health, Labor, Education and Pensions Committee, chaired by the more liberal Sen. Edward M. Kennedy, D-Mass., are both producing sweeping health bills, with some differences emerging between the two committees.

At their weekly luncheon Tuesday, Senate Democrats got a first look at Kennedy's proposals, which would include a new public insurance plan to compete with private providers. The Finance Committee is also considering a public plan, though some options being reviewed are more limited in scope than Kennedy's.

Obama brought Democrats from both committees to Tuesday's meeting, urging them to get a single bill through the Senate by early August despite their differences, and telling them they might not all get everything they want, according to senators who attended. Kennedy, who's been diagnosed with brain cancer, did not attend.

[Associated Press; By ERICA WERNER]

Associated Press writers Philip Elliott and Ricardo Alonso-Zaldivar contributed to this report.

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