http://www.latimes.com/news/nationworld/nation/la-na-health-funding11-2009jun11,0,385249.story

A panic attack over healthcare tab

By Noam N. Levey and Janet Hook

June 11, 2009

Reporting from Washington — Behind the open brawling over how to rebuild the nation's healthcare system, another struggle is beginning that may be the toughest test for the drive to cover millions of people without insurance and improve medical care for all: who should pay the eye-popping bill.

President Obama and his congressional allies -- who are also struggling to hold down the national debt after years of deficit spending and new outlays to combat the recession -- have pledged to raise more than $1 trillion over the next decade to offset the costs of what would be the biggest health overhaul in generations.

But the prospect of new taxes, new fees for businesses and cutbacks in other government spending has set off a furious behind-the-scenes struggle that is reviving the old maxim attributed to the late Sen. Russell Long of Louisiana: "Don't tax you, don't tax me, tax that fellow behind the tree."

Faced with a proposal to increase the tax on liquor and soft drinks, for instance, the liquor lobby sent Anchor Brewing Co. of San Francisco to see House Speaker Nancy Pelosi (D-San Francisco). The milk industry objected too, saying it would have to raise the price of chocolate milk.

And when congressional Democrats started warming up to the idea of curbing the tax break for employer-provided health benefits, the labor movement attacked one of the idea's leading champions, liberal Sen. Ron Wyden (D-Ore.).

"I suspect what will emerge as the toughest issue for lawmakers is not the ideological debate about the role of government, because there is some consensus there about the need for a centrist approach. Rather, it will be how to pay for the plan," said Drew Altman, president of the nonprofit Henry J. Kaiser Family Foundation. "The bottom line is there is no slam-dunk, easy way to do this."

To date, interest groups remain reluctant to appear intransigent and risk getting shut out of negotiations.

But the jockeying is expected to become public soon.

And it's already worrying Democrats on Capitol Hill, where there is little consensus about how to come up with hundreds of billions of dollars.

It also provides an indication of how hard it may be to maintain broad support once it gets down to specifics.

Obama, who at a White House meeting Wednesday urged a bipartisan group of senior lawmakers to press ahead with healthcare legislation, is stepping up his efforts. He travels to Wisconsin today for a town hall meeting focusing on healthcare.

So far, neither the president nor senior Democrats such as Senate Finance Committee Chairman Max Baucus of Montana have provided more than scant details about how they plan to raise the money.

A recent poll by the Kaiser Family Foundation found solid majorities of Americans favor some ideas for funding the overhaul, such as raising taxes on cigarettes, alcohol and families making more than $250,000.

But taxing sodas and unhealthy snacks is less popular, as is an across-the-board income tax hike.

Obama sparked an immediate backlash when he laid out plans to raise nearly $300 billion over the next decade by cutting payments to private insurers that contract to provide healthcare to seniors under the Medicare Advantage program.

The insurance industry, which helped derail the Clinton administration's healthcare push in the early 1990s, mobilized thousands of senior citizens by organizing Medicare Advantage community meetings across the country.

AARP, with more than 40 million members, blanketed Capitol Hill with letters warning lawmakers not to cut benefits to seniors.

Others rebelled at a second Obama proposal to come up with an additional $300 billion by reducing deductions for high-income taxpayers on charitable contributions, home mortgage interest, and state and local taxes.

Charitable organizations, who claimed the change would reduce the incentive for people to give to nonprofits during a recession, were so successful getting their message across on Capitol Hill that home builders and Realtors did not bother mounting a high-octane lobbying campaign of their own.

Congressional ideas have fared little better, with lobbyists challenging proposals to levy fees on businesses that don't provide health insurance and to raise taxes on liquor and sugary drinks.

Many interest groups are competing to convince lawmakers that they can't afford to get saddled with a healthcare tab.

When senior Democrats this week put forward their proposal for requiring employers to provide health insurance or pay into a fund to cover the uninsured, business groups led the charge.

"All we have been talking about for months is cost, cost, cost," said R. Bruce Josten, lobbyist for the U.S. Chamber of Commerce. "It seems like employers are the one group getting stuck paying the bill."

Gerry Shea, a top official at the AFL-CIO, which has been leading the fight against taxing health benefits, suggested charities, not people with health benefits, should pay.

"Nothing could turn my stomach more than seeing the charitable foundations going into panic mode," Shea said. "This is about healthcare. These foundations think their budget is more important than health."

noam.levey@latimes.com

janet.hook@latimes.com