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House Dems object to tax on expensive health plans

More than half of the Democrats in the House have signed a letter denouncing a key element of the Senate Finance Committee's health care legislation as labor unions draw a line in the sand on paying for reform.

The Democrats are attacking a plan to finance expanded health care by taxing expensive health insurance plans. The plan, sometimes cast as a tax on "Cadillac" plans, would in fact include the health care plans of many public employees and union members and has triggered a revolt from President Barack Obama's labor supporters and their many allies on Capitol Hill.

The letter from 154 House Democrats to Speaker Nancy Pelosi urges her "to reject proposals to enact an excise tax on high-cost insurance plans that could be potentially passed on to middle-class families."

"This is not an obscure detail of health care reform," said Connecticut Rep. Joe Courtney, who drafted the letter. "Taxing health benefits was explicitly debated in the campaign by presidential candidates and people running for Congress."

Then-candidate Obama attacked Republican Sen. John McCain in ads last fall for a plan to lift the tax exemption on health insurance plans, which he cast as a radical departure and a crippling new tax.

The Senate Finance Committee proposal is more limited - it would tax insurers, not the individual with the plan - but still seems to contradict Obama's campaign rhetoric. Labor leaders say they hope the White House - which has taken a publicly neutral posture - will back the unions as the Senate and House negotiate a final bill.

"I know for a fact that the White House believes in our principle: Make those who don't pay, pay," said Larry Cohen, president of the Communications Workers of America, who is among labor leaders pushing for higher taxes on employers who don't offer health insurance to their workers.

And the labor leaders are promising a battle. "We will fight pretty doggedly attempts to tax benefits because we've paid for those benefits over the years - we've forgone wage increases, pension increases, days off and everything else to get those medical benefits," said AFL-CIO president Richard Trumka.

There are no easy answers on the question of how to pay for a health care bill that will cost nearly $1 trillion over 10 years.

Seniors are worried about the hundreds of billions in cuts to Medicare. Small-business owners have raised red flags about a House proposal to impose new taxes on people who make more than $500,000 a year. And angering the unions at a critical juncture in the health care fight opens a new front on Obama's left flank.

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