House Proposal Aims to Extend Insurance Coverage

Health-Care Plan Would Add Surtax On Wealthy
House Democrats Propose to Expand Insurance Coverage
   
By Lori Montgomery and Ceci Connolly
Washington Post Staff Writers
Wednesday, July 15, 2009
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House Democrats announced a plan yesterday that would force the richest 2 million U.S. taxpayers to shoulder much of the cost of an expansion of the nation's health-care system, by imposing a surtax of as much as 5.4 percent on income above $350,000 a year.

The House proposal aims to extend insurance coverage to 37 million Americans over the next decade, covering more people through Medicaid and providing subsidies to help others meet a new federal mandate to purchase insurance. Democratic aides said the proposal would cost more than $1.2 trillion over the next 10 years, and would ensure that 97 percent of Americans were enrolled in a health plan by 2015.

About half of the cost would be covered by reducing spending on federal health programs, primarily Medicare, which serves the elderly and the disabled. But much of the rest of the money would come from a new tax on families earning more than $350,000 a year and individuals earning more than $280,000. The taxes, which would take effect in 2011, would affect about 2.1 million taxpayers, the nonprofit Tax Policy Center projected.

The surtax would start at 1 percent and rise to 5.4 percent on income exceeding $1 million. Combined with the expiration next year of tax cuts enacted during the Bush administration, the surtax would drive the top federal tax rate to 45 percent, the highest level since lawmakers rewrote the tax code in 1986.
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House leaders defended the plan by saying it targets those most able to pay -- the wealthiest 1.2 percent of households -- while honoring President Obama's pledge to protect the middle class from higher taxes.

Obama issued a statement praising the House plan. At a time when health-care costs are "crushing businesses and families and placing an unsustainable burden on governments," he said, "key committees in the House of Representatives have engaged in unprecedented cooperation to produce a health-care proposal that will lower costs, provide better care for patients and ensure fair treatment of consumers by the health-care industry."

But the plan has drawn sharp attacks from Republicans and is already creating friction with Democrats in the Senate.

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