Congress will move next year to make the 2009 estate tax level set by current law permanent and index the level for inflation, Sen. Max Baucus said today.

Baucus, D-Mont., chairman of the Senate Finance Committee, talked about the estate tax while telling reporters about what he expects Congress to work on in 2009 and 2010.

The first action would be on the huge stimulus package President-elect Barack Obama has said will be his first order of business when he takes office in January 2009, Baucus said.

Baucus said funding to support electronic transmission of health care records will be part of the package.

Dealing with the estate tax will come next, as part of work on a tax-cut package for the middle class, Baucus said.

Under current law, the taxpayers would get a $3.5 million-per-individual estate tax exemption in 2009. The maximum tax rate would be 45%.

The estate tax is set to expire in 2010 but to bounce back to the 2001 level in 2011, with a $1 million exemption and a 55% maximum tax rate.

Baucus also expressed support for reauthorizing the State Children’s Health Insurance Program for a short term, not simply extending the current SCHIP law.

Baucus said he does not support a longer-term, 5-year reauthorization of the program, because a longer reauthorization might interfere with efforts to tackle comprehensive health care reform.

The current program expires March 31.

Work on legislation tackling broader tax issues and paying for the huge sums Congress has appropriated to cope with the economic downturn would be delayed until 2010, Baucus said.

Baucus said he is finishing a health care reform bill and hopes to introduce the bill by the end of the year. He said the bill would have support from key Republican senators.

Baucus said he is waiting for the Congressional Budget Office to “score” the bill, or analyze how it would affect the federal budget over a 5-year period and a 10-year period.

Baucus said he has asked the CBO to break down the cost of each component of his reform package.

Taxes will be part of health care reform, because money is needed to finance health care, Baucus said.

Baucus said he will continue to fight for greater funding for Social Security. “Hideous service backlogs must be reduced,” he said.

Baucus’s comments are consistent with the view that “significant action on comprehensive health care reform is not likely until 2010 at the earliest,” according to Ira Loss, a health care analyst at Washington Analysis, Washington. “[You have to] deal with the acute issues, i.e. providing funds dealing with the huge downturn in the economy, before you deal with chronic issues, like health care reform.”

In comments earlier this week, David Stertzer, chief executive of the Association for Advanced Life Underwriting, Falls Church, Va., said the scenario for estate tax reform outlined by Baucus today would be acceptable to the insurance industry.

The AALU also will lobby for unification of the gift and estate tax exemptions, Stertzer said.

Under current law, the estate tax exemption increases to $3.5 million in 2009, while the gift tax exemption is locked at $1 million, Stertzer reported.

“Reunification would remove this differential, which discourages earlier transfers of assets–including small businesses–and would greatly improve succession planning and increase viability of businesses as they pass from one generation to the next,” Stertzer said.

Stertzer said the figures discussed by Baucus today are “in the range AALU strongly supports.”

Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, Washington, expressed support for the effort to include health information technology funding in the stimulus package.

“Moving towards a fuller interoperable health care system needs to be a priority,” he said.