House Dems looking at windfall profits tax on insurance industry

House Democrats are floating the idea of a windfall-profits tax on the private health insurance industry as a way to finance their healthcare overhaul, and to drum up support among members of a divided caucus.

House Speaker Nancy Pelosi (D-Calif.) called the windfall profits tax idea "very preliminary," saying she's asked House Ways and Means Chairman Charles Rangel (D-N.Y.) to look at how much the tax could raise.

I have asked Chairman Rangel to see what is in it for us," Pelosi said. "There's more that the insurance companies could contribute to this health care reform. They're going to get 50 million new consumers, many of them subsidized by the taxpayer. They can put more on the table."

The idea was brought up in a leadership meeting on Wednesday night and brought before the entire caucus on Thursday morning, according to Rep. Gerry Connolly (D-Va.).

Connolly said no specific structure or tax rates were discussed, nor was it estimated how much revenue could be brought in through a tax on the profits of the largest health insurance companies, but Connolly said the idea had wide support.

“I sense that would be a very popular thing to do in our caucus,” Connolly said.

Connolly did not say who was responsible for pushing the tax, but the profits of the largest private health insurers have been under close scrutiny by two high-ranking Democrats who don’t see eye to eye on the other major portions of the House health reform bill: Energy and Commerce Chairman Henry Waxman (D-Calif.) and Rep. Bart Stupak (D-Mich.), who chairs the Oversight and Investigations subcommittee on Waxman’s panel.

Waxman, a strong supporter of a “robust” public option, and Stupak, whose insistence on prohibiting any publicly funded healthcare plans from covering abortions has put him at odds with House leaders and complicated efforts to complete work on three House bills, have requested volumes of documents from the nation’s largest private insurers regarding their profits and the compensation paid to top executives.

Earlier this week Stupak said that a planned Oversight hearing on profits had to be put off because the committee received most of the information it requested at the deadline, and that more time was needed to comb through it.

But Stupak did say that a preliminary scan of the data showed that the profits of some of the largest companies might even larger than originally thought. Democrats — especially the more liberal ones in both the House and the Senate — have tied profits to the rising premiums and selective coverage of individuals in private plans as part of their rallying cry for a public option to compete with the private market.

Leaving the caucus meeting, though, Waxman said the windfall-profits tax was not a leadership-driven issue, but something individual members suggested.

“And we’ll take a look at it,” Waxman said.

How to pay for any of the various possible scenarios that will eventually become a single House bill is something that has divided the caucus as well, with liberal and conservative members split over the merits of a surtax on wealthy individuals versus a tax on premium private health plans.

Connolly suggested the windfall-profits tax could help bridge that divide.

Noting what he called the “conspicuous absence” of the private insurers among the lineup of healthcare industry players that have volunteered to contribute to the cost of health reform, Connolly said a profits tax could help offset the savings each side may have to give up to swallow a single approach.

“The idea of going to the insurance companies to get them to bring something to the table, either voluntarily or through legislation, is an idea that’s being floated out there,” Connolly said.

Mike Soraghan contributed to this story.