House Dems look at taxing the rich for health care

WASHINGTON House Democrats working on President Barack Obama's goal of health legislation are narrowing in on an income tax surcharge on the highest-paid wage earners to help subsidize insurance for the 50 million people who lack it.

Pushing to complete a comprehensive health care overhaul plan by Friday and bring it up for committee votes next week, House Democrats abandoned earlier money-raising proposals, including a payroll tax. They met behind closed doors Thursday to fine-tune the details.

"I promised the president that we would have legislation out of the House before we went on an August break. That is still my goal," House Speaker Nancy Pelosi said Thursday.

As discussed in the tax-writing House Ways and Means Committee, the surtax would apply to individuals with adjusted gross income of more than $200,000 and couples over $250,000, according to officials involved in the discussion. Most spoke on condition of anonymity because the talks were private.

Rep. Shelley Berkley, D-Nev., a member of the panel, said the panel is looking at a surtax of around 3.5 percent on income above those amounts. Other members suggested it would be closer to 3 percent.

In addition, key lawmakers are expected to call for a tax or fee equal to a percentage of a worker's salary on employers who do not offer health benefits.

Ways and Means Chairman Charles Rangel, D-N.Y., has said his committee needs to come up with $600 billion in new taxes to deliver on Obama's goal of sweeping changes to the nation's health care system to bring down costs and cover the 50 million uninsured. Hundreds of billions of dollars more would come from cuts to Medicare and Medicaid to pay for legislation expected to cost around $1 trillion over 10 years.

Lawmakers cautioned that no final decisions have been made. Smaller tax options remained possibilities, depending on the overall cost of the legislation, including a tax on sugared soft drinks and ending a tax break that drug companies receive for advertising.

The action in the House stood in contrast to the Senate, where Democrats edged away from their goal of passing health care legislation by early August amid heightening partisan controversy over tax increases and a proposed new government role in providing insurance to consumers.

Sen. Chuck Schumer, D-N.Y., told The Associated Press that he believes the "ultimate goal" is to have a bill by the end of the year that is signed into law by the president.

Separately, Republicans who met Wednesday with Senate Majority Leader Harry Reid, D-Nev., said he expressed flexibility on the timetable, indicating that he was willing to allow more time before legislation is brought to the floor.

Failure to meet the August goal would be a setback -- but not necessarily a fatal one -- for Obama's attempt to achieve comprehensive health care legislation this year. A group of Democratic and Republican senators led by Finance Committee Chairman Max Baucus, D-Mont., is still trying to work out a bipartisan deal.

But the Finance Committee work appeared to have suffered a setback when Reid relayed concerns to Baucus about the compromise taking shape. Finance's proposal was expected to omit a new government insurance option to compete with private insurers -- something Republicans oppose but most Democrats favor. A leading contender to pay for the measure was a new tax on employee health benefits, which Obama campaigned against and many Democrats oppose.

Pelosi made clear Thursday that whatever the Senate comes up with, the House bill will have a public plan and will not tax benefits.

"We will not be taxing benefits, health care benefits in any legislation that comes from the House," Pelosi said.

"And it will have, coming out of the House, a public option," she said. "The only debate on that is what it will be called: a patient option, public option. Write in your suggestions."

At least one moderate Democrat in the House bemoaned the rapid pace.

"I don't want to slow the process down, but we have to know what's in the bill," said Rep. Jim Cooper, D-Tenn. He added: "Members have to know what's in the bill, and most importantly the public has to know. Unlike most legislation that might affect an industry, or a slice of life, this legislation is going to affect every living American. So we've got to get it right."

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Associated Press writers David Espo, Ricardo Alonso-Zaldivar and Alan Fram contributed to this report.