150 Dems to Pelosi: No tax on health insurance

In a letter sent Wednesday to Pelosi (D-Calif.), a broad coalition of Blue Dogs and progressives said the proposed fee should not be included in the chamber's final healthcare reform bill.

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They said the tax on so-called Cadillac insurance plans that exceed certain cost thresholds — a 40 percent fee that is already part of the Senate Finance Committee’s draft bill — would “inevitably extend to more and more middle-income Americans across the country.”

“Real life experience with both health insurers and inelastic markets for services such as health insurance has clearly warned us that this tax will be passed along to insurance payers,” wrote Rep. Joe Courtney (D-Conn.), who is spearheading the effort.

The high-cost insurance tax has been a sticking point throughout this year's healthcare debate.

The idea's chief proponents point to a Congressional Budget Office projection that the tax could deliver up to $215 billion in revenue over the next 10 years. The Finance Committee included the tax in its forthcoming bill as a significant offset that has so far kept the bill deficit-neutral.

But critics charge that insurance companies would recover their losses by increasing their subscribers' premiums, eventually passing the tax on to consumers.

For the most part, Pelosi has remained open to a host of fees and other means to pay for healthcare reform.

On Tuesday, she even discussed the possibility of a value-added tax (VAT), which would assess fees based on how much value a manufacturer adds to a product. The Speaker insists any change to the tax code included in healthcare reform would not adversely affect middle-class Americans.

But Democrats on Wednesday compared the proposed excise tax compared to the Alternative Minimum Tax, which eventually affected middle-income workers despite its proponents' insistence otherwise.

“America's Affordable Health Choices Act includes sensible revenue sources to pay for the legislation,” the lawmakers wrote. “However, inclusion of an excise tax on high-cost insurance plans ... could have significant and detrimental effects for millions of middle-class Americans.”