California Healthline Daily Edition

Summaries of health policy coverage from major news organizations

White House Calls for New Taxes To Help Fund Health Care Overhaul

On Monday, the Obama administration proposed $58 billion in new taxes in response to findings that returns from the original funding mechanism for President Obama's health care plan were overstated, the AP/Boston Globe reports (Ohlemacher, AP/Boston Globe, 5/11).

Revised Treasury Department estimates show that Obama's main tax initiative for funding half of the 10-year health care reform trust fund -- through a 28% cap on deductions for U.S. households in the top two tax brackets -- would raise $266.7 billion over 10 years, about $51 billion less than the estimate of $318 billion included in the budget blueprint Obama presented in February.

The other half of the fund would come from Medicare savings also included in the budget plan (Calmes [1], New York Times, 5/12).

The White House Office of Management and Budget now is proposing a $12.7 billion tax increase on life insurance companies, which includes a modification of a "dividends-received deduction," as well as a $24.2 billion increase from modifying the estate and gift tax to require "consistent valuation" of property (Schatz, CQ Today, 5/11).

The valuation rules would affect less than three-tenths of 1% of estates in a given year, according to a senior Treasury official who spoke anonymously (Calmes [2], New York Times, 5/12).

The AP/Globe reports that Congress "has been cool to" Obama's original proposal for limiting tax deductions, noting that they could diminish charitable giving (AP/Boston Globe, 5/11).

Senate Finance Committee Chair Max Baucus (D-Mont.) has said that he favors funding an overhaul using savings from the health system (CQ Today, 5/11).

Beverage Tax?

On Tuesday, the Finance Committee is expected to hear proposals from various experts on how to pay for a health care overhaul, the Wall Street Journal reports.

The Center for Science in the Public Interest plans to propose a federal excise tax on soda and other high-calorie beverages.

Senior staff members for some Democratic senators who have a leading role in the health reform effort are discussing the idea in closed-door meetings, according to Senate aides.

Lawmakers are expected to "narrow the list" of proposals in coming weeks, the Journal reports.

Supporters of a beverage tax say that consuming drinks sweetened with sugar can cause obesity, diabetes and other conditions, and that such a tax could yield a decrease in health problems and spending.

The Congressional Budget Office estimates that adding a three-cent tax per 12-ounce serving of these drinks would bring in about $24 billion over the next four years, although lawmakers have not indicated how large of a tax they would consider.

Such a tax "would pay for only a fraction of the cost to expand health insurance to all Americans and would face strong opposition from the beverage industry" and would "spark a backlash from consumers," the Journal reports.

Michael Jacobson, CSPI's executive director, said he also will propose tax increases on alcohol, bans on trans-fat, and reductions in sodium content in packaged and restaurant-served food (Adamy, Wall Street Journal, 5/12). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.