Democratic health proposal boosts taxes on rich

Capping weeks of negotiations over how to pay for a healthcare overhaul that could top $1 trillion over the next decade, senior House Democrats have settled on a proposal to cover a significant portion of the cost by raising income taxes on the wealthiest Americans.

House Ways and Means Committee Chairman Charles B. Rangel (D-N.Y.) said Friday that the plan -- which Democrats expect to present in detail Monday -- could generate as much as $540 billion over 10 years.

Married taxpayers earning more than $350,000 a year in adjusted gross income and single filers making more than $280,000 a year would pay a surtax of at least 1%. Rates would rise on higher incomes, with families earning more than $1 million paying about 3%.

The tax plan faces an uncertain fate in the House and the Senate, where Democrats and Republicans are working on their own proposals to offset the costs of helping tens of millions of people get health insurance.

Senate leaders have shown much less interest in a new income tax. President Obama, meanwhile, has proposed raising more than $300 billion over 10 years by limiting the deductions that wealthy Americans take on their income taxes.

Funding has emerged in recent weeks as one of the most politically explosive parts of the healthcare debate on Capitol Hill. It has slowed the advance of healthcare bills in both chambers as senior Democrats look for ways to hold together their party and keep powerful interest groups from turning against their campaign to overhaul the system.

On Friday, senior House Democrats sought to reassure moderate “Blue Dogs” and other centrist lawmakers who have complained that the healthcare bill being pushed by party leaders does not do enough to bring down costs, protect small businesses and boost payments to rural healthcare providers.

“Their concerns will be reflected in changes we are making,” said House Energy and Commerce Committee Chairman Henry A. Waxman (D-Beverly Hills), one of three lead authors of the House healthcare bill who met with moderates Friday.

“I think we made some good progress.”

Waxman said that revisions to the bill would exempt more small businesses from having to pay fees if they do not provide insurance to their employees, and would include more changes in Medicare to bring down costs.

Moderates “made a good case,” he said, expressing optimism that the House would be able to finish its work on the bill before lawmakers leave for their August recess.

President Obama, speaking from the Group of 8 summit in Italy on Friday, insisted that healthcare legislation was on track despite a week of fits and starts on Capitol Hill.

“There are going to be some tough negotiations in the days and weeks to come, but I’m confident that we’re going to get it done,” Obama told reporters. “We’re closer to that significant reform than at any time in recent history.”

The president, who called healthcare his “highest legislative priority” over the next month, said he would be working to allay fears about the effects of an overhaul.

“We have a long history in America of scaring people that they’re going to lose their doctor, they’re going to lose their healthcare plans, they’re going to be stuck with some bureaucratic government system that’s not responsive to their needs,” Obama said.

“And overcoming that fear -- fear that is often actively promoted by special interests who profit from the existing system -- is a challenge.”

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noam.levey@latimes.com