Interest groups battle to deflect health taxes

[October 14, 2009]  WASHINGTON (AP) -- Insurance companies, unions, medical device makers and others in the health care industry are furiously lobbying lawmakers to shift burdens onto someone else -- anyone else -- before they find themselves saddled with billions of dollars in taxes under new health care legislation.

Their gain would be another industry's loss, of course, unless the entire overhaul effort collapses and Congress fails to agree on how to pay to provide health coverage for millions of uninsured Americans.

The lobbying and jockeying worry some lawmakers, who say the proposed $829 billion, 10-year Senate plan that advanced Tuesday is a delicate balance of opposing forces. The Senate Finance Committee endorsed it, 14-9, making it the first health care bill to draw a Republican vote in either house.

But new barriers lie ahead. About 30 unions joined in full-page newspaper ads Wednesday opposing the measure's plan to tax generous employer-provided health plans. On Sunday, the insurance industry released a report saying the bill would raise insurance costs for people who already have policies. And the industry this week began a TV ad campaign in six states accusing Democrats of seeking to cut $100 billion from subsidies for Medicare Advantage, under which private insurance companies provide Medicare benefits.

The bill will be blended with a rival Senate version, and then face many amendment attempts by liberal, moderate and conservative senators. A final Senate bill will have to be reconciled with a House health bill that is likely to differ in many ways.

President Barack Obama will play a huge role in the process this fall. He has vowed not to sign a bill that will add to the long-term deficit.

That means lawmakers must hold the plan's 10-year cost to about $900 billion, while finding enough savings and revenue sources to cover that amount. Key industries are scrambling to avoid being a target.

"They need to raise $900 billion, and no one wants to fork over the money," said Michael F. Jacobson, executive director of the Center for Science in the Public Interest, which wants Congress to raise money by taxing sugary soft drinks. The soft drink industry responded with a TV and newspaper ad campaign opposing the idea.

The prevailing attitude everywhere, Jacobson said, is "don't tax us, tax them."

Indeed, when 14 Democratic senators recently wrote to party leaders, they said the health proposals must be fully paid for. However, they wrote, they are "extremely concerned" about a proposed $39 billion, 10-year tax on medical devices in the Senate Finance bill.

The tax "could threaten jobs in our states," the senators said, and reduce access "to lifesaving medical devices for patients."

Brett Loper, chief lobbyist for the medical device industry, said his constituents are hardly the only ones urging home-state lawmakers to fight on behalf of local employers. But if one targeted group is spared, he acknowledged, another must be found.

"It's a zero-sum game," Loper said.

Meanwhile, the medical insurance industry is lobbying strenuously to change several items in the Senate Finance bill, starting with a proposed $6.1 billion-a-year "fee," to be apportioned among insurers according to their market share. Supporters say the fee, or "windfall profits tax," is justified because the legislation would bring the industry millions of new customers.

But Alissa Fox, a top lobbyist for the Blue Cross and Blue Shield Association, said there would be no windfall profits because some of the new customers would incur extensive medical costs.

Her group opposes other Senate proposals as well. Fox said lawmakers need to increase the proposed penalties for eligible people who decline to buy health insurance, or else too many will opt out.

The insurance industry also opposes a proposal to allow the government to sell insurance, which House leaders have endorsed and many Democratic senators support.

Fox used diplomatic terms to describe the full-bore lobbying under way. "We will be educating members of Congress about the very problematic consequences of these issues," she said.

Democrats disputed the insurance industry report, released Sunday, that warned of higher premiums for insured Americans. The White House called it distorted and flawed.

Another contentious Senate Finance provision would create an independent commission to recommend cost reductions in Medicare. Doctors and others are angry that hospitals and hospices, but not other providers, would be exempt from the commission's reach.

Also lobbying to change the Senate bill are numerous labor unions, an important Democratic constituency. They want senators to drop a provision to tax insurers who provide high-cost health plans.

The tax is bound to be passed on to customers, the unions say, and it could hit many of their members who have negotiated generous benefits, or impede future negotiations.

Gerald McEntee, president of the American Federation of State, County and Municipal Employees, said in an interview that his union will press Senate leaders to advance a bill that offers optional, publicly run insurance coverage and drops the proposed tax on high-cost insurance policies.

"Let's charge the millionaires," McEntee said, "instead of people making $40,000, $50,000 a year."

In other words, don't tax us, tax them.

[Associated Press; By CHARLES BABINGTON]

Associated Press writer Alan Fram contributed to this report.

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