WASHINGTON — President Barack Obama on Wednesday rejected the idea of fully taxing Americans' employer-provided health insurance benefits, but suggested he might be persuaded to tax so-called Cadillac coverage, benefits worth perhaps more than $13,000 a year, in the interest of a compromise with Congress.
"I continue to believe that's the wrong way to do it," the president said in an ABC News special taped Wednesday in the East Room of the White House. The town hall-style event included an audience of 164 invited guests and was aired exclusively on ABC.
Obama said he would prefer to pay for expanded coverage by eliminating some deductions for higher-earning taxpayers but that "there's going to have to be some compromise."
The special, which drew the ire of Republicans because it didn't include them, came as Obama intensifies his campaign to overhaul the nation's health care system. Polls show Americans want but fear change, and a divided Congress is grappling over what to do.
In one exchange with the audience, neurologist Orrin Devinsky asked the president to imagine a scenario in which his wife or one of their daughters became seriously ill. If the sort of public insurance option Obama proposes as an alternative to private insurance limited their tests or treatment, would the president forgo outside options or look for help beyond what was available to Americans with no other option? Obama didn't answer directly, but said that with his family, "I always want them to get the very best care." At the same time, he said, "The status quo is untenable."
Obama said he understands Americans' trepidation about changing the system: "They know that they're living with the devil, but the devil they know they think may be better than the devil they don't." He said any reform would be phased in, not happen overnight.
Appearing earlier Wednesday on ABC's "Good Morning America," Obama said he that "absolutely" expects Congress to pass comprehensive health care legislation by year's end.
Obama also met at the White House on Wednesday with five governors who're part of a bipartisan group that recently hosted health care roundtables around the country.
"There's no perfect unanimity across the table in terms of every single aspect of reform," the president said in remarks after their meeting. "I think everybody here wants to make sure that governors have flexibility, that they have input into how legislation is being shaped on the Hill."
The scope of what Obama, many Democrats and some Republicans want to do is massive, and lawmakers have various ideas about how to get it done.
The most controversial proposal in the emerging debate is to create a so-called public option, beyond Medicaid and Medicare, as an alternative to private insurance. Obama supports that. He has said that would keep private insurers honest and efficient because they'd have to compete.
Insurers and other skeptics contend that a public option ultimately would run private insurance out of business and force all Americans into government coverage.
Offering universal coverage could cost between $1 trillion and $1.6 trillion in the first decade alone, according to Congressional Budget Office estimates.
Obama has proposed $622 billion in health care cost savings, but needs more than $300 billion more to come from what Sebelius called "revenue enhancers." That could include taxing a portion of employer-sponsored health benefits. Some senators said that Obama told them earlier this month that option is still on the table.
Key senators said the idea is slowly gaining support. Sens. Kent Conrad, D-N.D., and Max Baucus, D-Mont., top Senate Finance Committee members, said Wednesday that they were looking seriously at such a tax; among the options are imposing it on benefits only above a certain cost level.
On Capitol Hill, Health and Human Services Secretary Kathleen Sebelius told the House Energy and Commerce Committee that revamping the health care system to contain costs and cover roughly 50 million uninsured Americans is "our most important domestic priority."
Sebelius didn't rule out taxing health insurance benefits as a way to pay for such an expansion. Obama blasted that idea during last year's presidential campaign but it seems to be gaining currency as Democrats look to avoid increasing the federal deficit with an expensive health-care overhaul.
Sebelius and White House Chief of Staff Rahm Emanuel also met Tuesday night with key Democratic lawmakers.
Randel Johnson, a U.S. Chamber of Commerce senior vice president, told the House Ways and Means Committee that "requiring employers to either provide some level of health insurance or surrender a huge percentage of payroll to the government will result in job losses and lower wages.
"Whether or not this proposal is a Trojan horse for single-payer health care," he said, "it is apparent that its cause is ideological, not pragmatic."
A CBS/New York Times poll earlier this month found that 72 percent of Americans favor offering people coverage through a government plan similar to Medicare. In the same poll 57 percent said they'd be willing to pay higher taxes in order to cover everyone.
However, an ABC News/Washington Post poll this month found 58 percent of U.S. adults were "very" concerned and another 23 percent "somewhat" concerned that the current effort would reduce the quality of care they receive. Americans also worry that changing the system could end up increasing costs, limiting choices of doctors and treatments and sharply increasing the federal deficit.
MORE FROM MCCLATCHY
Follow the latest politics news at McClatchy's Planet Washington
McClatchy Newspapers 2009