Benefits tax an option, official says Health panel aide clarifies report

March 11, 1993|By John Fairhall | John Fairhall,Washington Bureau

WASHINGTON -- A senior White House aide said yesterday that the Clinton administration has not ruled out a possible tax on employee health benefits, despite recent indications to the contrary by Hillary Rodham Clinton.

Ira Magaziner, who is coordinating the activities of the health care reform task force headed by Mrs. Clinton, said: "I don't think she has ruled out the" possibility. But he suggested that any such tax would be minimal and cautioned that no decision has been made.

Mrs. Clinton told the Associated Press in an interview Monday that taxing workers' health benefits would be "unfair." But Mr. Magaziner suggested the AP story was mistaken when it reported that she had ruled out such a tax.

In other comments yesterday, Mr. Magaziner told a group of drug store executives that the task force is seriously considering including long-term care and prescription drugs in the standard benefit package that every American would be guaranteed under the health reform goals set by President Clinton.

He reiterated the president's belief that "as a birthright, as an American, you ought to have access to adequate health care."

The confusion on the issue of taxing health benefits reflects the difficulties the administration is facing as it tries to sell the public on health care reform before a plan has been developed. While Mrs. Clinton and Mr. Magaziner are accepting frequent invitations to make general comments about the secretive task force's work, they are not revealing many details, saying that a plan won't be ready until May.

News reports speculating on the options being explored by the task force have sometimes irritated administration officials, who fear the public might be getting the wrong impression. Mr. Magaziner said that Mrs. Clinton appeared to be trying to dispel fears that there might be a "humongous tax" to pay for health care reform.

The administration's guiding "principle is not . . . to screw the middle class," Mr. Magaziner told reporters after meeting with the National Association of Chain Drug Stores and the National Retail Federation.

Nevertheless, he said that contrary to what Mrs. Clinton was reported to have said Monday, "everything's on the table," including limiting the ability of businesses to deduct the cost of health care benefits provided to employees.

That could hit workers hard. Under one scenario, the government could directly tax the employee on the value of employer-provided benefits. Or it could force the employer to pay the taxes, which might lead companies to scale back benefits or pass on the taxes to employees.

Opinion surveys show strong public opposition to such a tax. It's also being fought behind the scenes by labor unions, whose support the administration wants when it completes work on a health care program.

But sources familiar with the task force's work say it is considering only limited use of a tax. Mr. Magaziner underscored that thinking, giving reporters a hypothetical example in which the tax would be applied only on benefits above and beyond the standard insurance package the Clinton administration wants every American to have.

When asked whether some limits might have to be set on the use of expensive life-saving technologies, Mr. Magaziner said that in his "personal opinion" that wouldn't be necessary. Estimating that the health care system currently squanders $200 billion a year, he said that "before we get into talking about" restrictions, "we have an obligation to talk about taking more of the waste out of the system."

He noted that the administration plans to "stick with an employer-based system" of health insurance and emphasized the benefits of health reform to businesses, which he said are at a "competitive disadvantage vis-a-vis other countries" because of the high cost of providing health care in the United States. He said that companies currently providing benefits to workers stand to gain from cost savings under health reform.

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