Reid might hike Medicare tax to pay for healthcare reform

Senate Democrats are now mulling a conditional increase in the payroll tax as a way to pay for their forthcoming healthcare reform bill.

That proposed hike -- which would be added to the Medicare taxes employers and employees already pay -- would likely only apply to income that exceeds $250,000 a year, according to the Associated Press, which spoke on Wednesday with a number of Democrats.

The tax has long been set at 1.45 percent of workers' income, an amount employers must match. However, it is not clear how high Senate Majority Leader Harry Reid (Nev.) would like to raise it, or how committed he is to the idea.

Nevertheless, the increased fee's inclusion in the chamber's final healthcare bill is sure to strike a sour note among most lawmakers.

When House Democrats mulled an income surtax as a way to offset the costs of their bill, a number of lawmakers from both political parties and chambers fired back that new fees during a recession would adversely impact small businesses and middle-class families.

That increase differed markedly from the fee Reid is reportedly considering, but those arguments are still likely to return if the majority leader ultimately includes any Medicare fee increase in his bill.

It is still unclear, however, when that bill might be available. The majority leader first submitted it for cost estimates about two weeks ago, and the Congressional Budget Office has yet to finish its work. Still, Senate Democrats maintain they can pass a bill by the year's end -- and some have even said it could reach the president's desk within that tight time frame.