The Senate Finance Committee is poised to send its bill to the full legislature today, but its provision taxing "Cadillac" insurance plans is raising hackles in the House. Max Baucus and other senators say taxing high-cost plans will raise $200 billion, a quarter of the legislation's price tag, and keep costs down over time. But House members and union leaders say the tax burden will trickle down to workers and the middle class. Nancy Pelosi opposes the tax, as do two-thirds of House Democrats.
The Cadillac tax debate doesn't just highlight the stark divisions that remain within the Democratic caucus on health care reform. More than that, it challenges the commitment of President Obama, who embraced the tax in his September address to Congress, to keep spiraling costs down even if it means antagonizing his own party. And the proposal has created some strange bedfellows. Last week lobbyists from organized labor hit Capitol Hill to oppose the tax—hand in hand with the Chamber of Commerce.