Health benefits tax reportedly is abandoned WHITE HOUSE

February 25, 1993|By Los Angeles Times

WASHINGTON -- The White House health care task force has abandoned a politically sensitive proposal to tax health benefits that workers receive from employers, previously a key element of an emerging package to help finance national health care reform, sources said yesterday.

The reason, sources said, is the opposition of first lady Hillary Rodham Clinton, who chairs the presidential Task Force on National Health Care Reform. The proposal, which analysts say also would have made consumers more cost-conscious, was drawing opposition from labor, business and insurance industry representatives.

"She did not think it's wise to have it in the plan," said a source who met this week with Mrs. Clinton.

Another source recalled the first lady telling a key adviser: "There's something more important than having prudent purchasers, and that's called getting re-elected in four years."

By not seeking such a tax, which might have raised $20 billion or more annually, the Clinton administration greatly improves the chances that its overall reform agenda will receive support from middle-income Americans, who would have been hit hard by a benefits tax.

Currently, such benefits do not count as taxable income and businesses can write off that expense, which typically costs several thousand dollars a year per employee.

The task force also is considering subsidies for long-term care and prescription drugs for the elderly as a way to bring another powerful group on board, sources said.

To raise some of the revenues to pay for such services, which would include phased-in medical coverage for the estimated 37 million uninsured Americans, the task force intends to seek tax hikes on alcohol, tobacco, guns and ammunition, in addition to such cost-containment measures as imposing caps on insurance premiums and a price freeze on doctors and hospitals, sources said.

A White House spokesman declined last night to confirm that Mrs. Clinton's task force has backed away from a health benefits tax.

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