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Health-Care Overhaul 2010

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White House nears deal on health care

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"It brings us down to a few very important but very solvable issues," Rep. Robert E. Andrews (D-N.J.), whom House leaders assigned to brief reporters on the talks, said of the tax breakthrough. "It was the last major policy issue on the table."

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The tax on high-cost policies was designed in the Senate, which voted to impose a 40 percent excise levy on family policies that cost more than $23,000 a year -- far above the national average of $13,400, according to the Kaiser Family Foundation. Senate Democrats argued that the tax would not only generate nearly $150 billion for health-care legislation but also help lower costs. Last week, Obama endorsed the tax, which is also critical to ensuring that health-care legislation does not add to future deficits.

Labor leaders have long argued that the tax would fall especially hard on union members, who have for years bargained for more generous benefits in lieu of higher wages. By one analysis, the Senate tax would have affected as many as one in four union members.

The deal cut Thursday would raise the value of policies subject to the tax to $24,000 for families and $8,900 for individuals. Plans with significant numbers of women or older workers would receive an additional break, as would workers in high-cost states and high-risk professions. Dental and vision plans would be exempt starting in 2015. And workers with collective-bargaining agreements and government employers would be exempt until 2018, giving labor leaders time to negotiate new contracts.

The changes would cut anticipated revenue from the tax by $60 billion over 10 years, labor leaders said, opening a hole in the health-care financing package that Democrats say is likely to be filled by a tax on the wealthy, most likely by applying Medicare payroll taxes to investment income for families earning more than $250,000 a year.

Republicans blasted the deal as a giveaway to a major Democratic constituency, but labor leaders defended their agreement in a conference call with reporters.

"We were always concerned about the impact on working people in this country," said Anna Burger, head of the labor-backed Change to Win coalition. "The compromises we reached in the last 24 hours make a huge difference in making sure that workers who have good health care can hold on to their health care."

Staff writers Paul Kane and Alec MacGillis contributed to this report.

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