Nancy Pelosi’s caucus held a conference call yesterday to discuss the health-care overhaul bill that came out of the Senate, and it appears that House Democrats are in no mood to accept it. Ben Pershing reports in the Washington Post that the “Cadillac tax” has generated the most opposition, with only one House Democrat (Colorado’s Jared Polis) defending it. Driven mainly by union opposition, Pelosi’s caucus appears ready to revamp the bill again — which will create more openings for division:
Worried House Democrats held a caucus-wide conference call Thursday to strategize about health-care reform before lawmakers return to Washington next week.
More than 100 members joined in on the call, Democratic aides said, to discuss the differences between the House’s health bill and the one passed by the Senate. With Senate Democrats barely able to muster the 60 votes necessary to pass their own bill and President Obama leaning toward the Senate’s position on some key issues, House Democrats are increasingly concerned they could be marginalized at the bargaining table.
Liberals are particularly worried that Obama has indicated to negotiators that he wants to preserve the so-called “Cadillac tax” on high-cost health plans, a provision that is included in the Senate bill but not the House measure. Rep. Raul Grijalva (D-Ariz.), co-chairman of the Congressional Progressive Caucus, said several members spoke out on the subject during Thursday’s call. …
Rep. Joe Courtney (D-Conn.) has enlisted 190 House Democrats to sign a letter declaring their opposition to the tax, which has also been fiercely criticized by labor unions — some of whose members would be exposed to the tax — and by other skeptics who fear the tax could hurt the middle class. Defenders of the excise tax say it will put people who buy their own insurance on more equal footing with those who receive insurance through their employers, and that the tax will help reduce costs over time.
This excise tax really is a problem, and not just for the unions. The biggest problem with it is that it will become moot. The Senate estimated that it would receive hundreds of billions in revenue from the tax, but that relied on a static analysis that assumed the plans would still get offered while attracting penalties. As soon as the tax hits, those plans will disappear, and insurers will recalculate coverage to give the maximum benefit while avoiding the taxes. It’s much more likely that the government will see little to no revenue at all from this tax, which blows a big hole in the delicate deficit balance the Senate was attempting to achieve, at least on paper.
If the House redrafts the Senate bill to eliminate the Cadillac-plan excise tax, they will have to replace the revenue from somewhere else. The Senate rejected a massive increase in the income tax, and wisely so during a recession. Pelosi favors a “surtax” on the wealthy as a means of getting the money, which at least has the virtue of being more realistic than the Cadillac excise tax. However, an income-tax hike will hit small businesses that file as individuals for tax purposes, harming job creation and further dampening any recovery, real or imagined.
It also means that the Senate has to reintroduce the House bill — and that means at least two cloture votes, even if the Senate doesn’t allow any amendments or committee work. It’s another opportunity to kill the bill, and given the political damage the last round did to red-state Democrats in the upper chamber, Harry Reid may not be able to bargain his way around those cloture votes again. The unions may wind up killing the bill, thanks to their self-serving opposition to paying taxes for a program for which they have been lobbying for months.