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Senators weighing tax increases to pay for health care overhaul

WASHINGTON - Senators are considering limiting - but not eliminating - the tax-free status of employer-provided health benefits to help pay for President Barack Obama's overhaul plan and provide coverage to 50 million uninsured Americans.

Finance Committee Chairman Max Baucus, D-Mont., said Tuesday that there are no easy options. Senators began grappling with how to finance guaranteed coverage for all Americans, even as independent experts put the costs at about $1.5 trillion over 10 years.

The final package is likely to include a mix of tax increases and spending cuts in federal health programs. Among the possibilities: tax hikes on alcoholic beverages, tobacco products and sugary soft drinks, and restrictions on other health care-related tax breaks, such as flexible spending accounts.

But some taxes don't seem to be on the table, such as a federal sales levy to pay for health care or a new payroll tax.

Congressional leaders say they want to pass legislation in the Senate and House this summer.

On the controversial question of taxing health benefits, Baucus is staking out a position that could put him at odds with Obama.

The president adamantly opposed such taxes during the campaign, arguing they would undermine job-based coverage. Obama's aides now say he's open to suggestions from Congress, even if he criticized Republican presidential rival John McCain for proposing a sweeping version of the same basic idea.