Durbin: 'Cadillac tax' could mean higher health costs

The taxes on high-value insurance plans in Senate health legislation could be passed along to consumers, a top Democrat said Tuesday.

Senate Majority Whip Dick Durbin (Ill.), the second-ranking Democrat in the Senate, conceded that the financing mechanism could result in insurance companies passing along the costs of the new taxes to consumers by way of higher premiums.

"It could," Durbin said during an interview yesterday evening on Chicago Public Radio when asked if the surtaxes on high-value plans could be passed along.

He defended the taxes on high-value plans as a way to rein in the inflation in health costs over time.

"The notion there is to try to keep these costs from escalating; to try to force some economies and cost efficiencies in the health insurance itself," Durbin explained.

The taxes, Durbin suggested, would also help lead to an informal cap on the dollar value of health plans for Americans, to help keep costs under control.

"And I think whatever the number is -- let's say it's $23,000 worth of health insurance in a given year," Durbin said. "That is, I think, going to become more or less the ceiling where we try to keep a control on the overall cost of health insurance plans."

Organized labor groups have criticized the so-called "Cadillac tax" on the plans as disproportionately affecting middle-class, unionized workers who see large supplements to their incomes through generous insurance plans. Those labor groups have largely said they favor the income tax on top earners contained within House legislation as a way to finance the reforms.

The majority whip said that the ultimate language of the bill would be crafted on the Senate debate, a debate to which Durbin said he had the necessary 60 votes to proceed.

"Once the bill's been approved by the Congressional Budget Office, we have, I believe, the assurance of 60 Democrats to move forward to floor debate," Durbin explained. "During the course of that we'll try to find the sweet spot where we find 60 people to pass the bill."

The other issues the Illinois Democrat said would be resolved during that debate would be the public option as well as federal funding for abortion.

Durbin asserted that the Senate would try to craft its own language on federal funding for abortion, aiming for something less sweeping than the House amendment offered by Rep. Bart Stupak (D-Mich.).

"We're going to try to walk through this, either dealing with the plan or approach similar to the House or with our own variation," he said. "I can't predict at this moment what exactly it'll look like."

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