TAX NEWS - June 2010

Democrats Push Health-Insurance Subsidies For Jobless To Be Added To Tax Bill

Senate Democrats fought Thursday to reinstate funds for health-insurance subsidies for unemployed people in a $85 billion tax and benefit bill currently before the Senate.

The subsidies through the Cobra program had been part of an earlier version of the legislation but were stripped out in the House because of concerns of moderate Democrats about the cost of the bill.

When the legislation returned to the Senate this week, Democratic leaders added $24 billion in aid to states to help them pay for rising Medicaid costs, but the insurance subsidies weren't included.

The subsidy program expired alongside emergency federal jobless benefits on June 2. An extension of the unemployment assistance is part of the tax bill.

Without the subsidies, people who lose their health-insurance coverage when they are laid off still would have the right to continue their existing coverage but would have to foot the bill for the entire amount--including the portion formerly paid for by the employer.

The expired subsidy covered 65% of that cost.

Sen. Bob Casey (D., Pa.) introduced an amendment to the tax bill that would include an extension of the subsidy program through November at a cost of $7 billion. He said Thursday that renewing the subsidies was essential for many people around the country.

According to the National Employment Law Project, an advocacy group, 144,000 people a month will lose out on the benefit subsidies if they aren't renewed.

But despite the support of the three senior Senate Democrats--Majority Leader Harry Reid (D., Nev.), and his top lieutenants Sens. Richard Durbin (D., Ill.) and Charles Schumer (D., N.Y.), it is unclear whether the matter will come up for a vote on the Senate floor next week.

Reid said Thursday he didn't yet know whether there would be a vote on the measure.

Democrats want to complete the legislation next week, and taking what could be several days out to debate the Cobra amendment could prevent them from doing so.

Republicans--who already have balked at the size of the current bill--have made it clear that unless the health-insurance-subsidy extension is offset by savings elsewhere in the federal budget, they wouldn't support its inclusion in the legislation.

Thursday, Sen. Jon Kyl (R., Ariz.), the No. 2 Senate Republican, said he was already opposed to the bill and that adding the health-insurance subsidies would only serve to strengthen his opposition.

Sen. Scott Brown (R., Mass.), a moderate Republican who Democrats often target to switch his vote on issues affecting dealing with the country's economic recovery, said that on this matter he was sticking with his party.

"Bottom line is we have to find a way to pay for it," he said Thursday.