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PENALTY FEE WILL HIT MIDDLE CLASS

By Peter Cohn and Anna Edney

Citing new figures from CBO and the Joint Committee on Taxation, Senate Republicans today said 71 percent of the individual mandate penalties in Senate Finance Chairman Max Baucus’ healthcare overhaul mark would fall on families with annual household income of less than $250,000, which would violate a campaign pledge by President Obama.

The data analyzed by the nonpartisan scorekeepers say that of the $2.8 billion in penalties imposed on those who do not purchase health insurance, $2 billion would be raised from taxpayers earning less than 500 percent of the poverty line, or $120,000 for a family of four. Senate Republicans contrasted that with campaign pledges by Obama that he would not raise taxes on families earning less than $250,000 by “one single dime.”

Obama has refuted claims that the mandate penalties are a form of tax, and the White House Tuesday posted talking points on its blog to that effect.

“What President Obama is proposing is not a tax, but a requirement to comply with the law,” said the post, equating the penalties with fines for speeding or lack of car insurance. “What we’re talking about is a penalty for the few people who will refuse to buy health insurance — even though they can afford it — and who expect the rest of us to pick up the tab for their care.”

During today’s committee markup, Sen. John Kerry, D-Mass., set the stage to narrow the number of high-cost “Cadillac” plans subject to the excise tax. Kerry offered an amendment to raise the definition of “Cadillac” to plans totaling $9,800 for individuals and $25,000 for families. He did not seek a committee vote, but he let Baucus know he was inclined to work out a deal.

“I hate to see it extrapolated beyond its original intent,” Kerry said. “A lot of people were supportive of this with the understanding that it is X and now it’s Y.”

Kerry introduced the idea of taxing insurers on “Cadillac” plans when the committee was looking for $140 billion to fill an offset gap. Baucus’ mark raises $215 billion by taxing plans starting at $8,000 for individuals and $21,000 for families.

The mark lifts the threshold for retired people over 55 years old and those with high-risk jobs, such as construction or firefighting, by $750 for individual coverage and $2,000 for family coverage before plans are considered “Cadillac.”

Several committee Democrats supported Kerry’s amendment. Sen. Debbie Stabenow, D-Mich., said she wanted to “make sure that we are not adding a tax for middle-income workers, for retirees.”

Baucus said he would work with Kerry but warned his mark sought to strike a careful balance that will help reduce the growth of healthcare spending.

The committee rejected an amendment proposed by Sen. Orrin Hatch, R-Utah, meant to codify federal rules that restrict federal funds, such as the premium tax credits included in Baucus’ mark, from being used for abortions. The committee shot down Hatch’s attempt to further extend conscience clauses to protect healthcare providers that do not want to perform abortions.

The votes were largely along party lines, although Senate Budget Chairman Kent Conrad voted in favor of the Hatch amendments while Sen. Olympia Snowe, R-Maine, voted against them.

http://www.nationaljournal.com/congressdaily/cdp_20090930_2122.php

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October 1, 2009 - Posted by | Federal Government, healthcare | , ,

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