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Labor Steps Up Pressure On Health Care Taxes
Sen. Bernie Sanders (I-VT)
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The AFL-CIO is ratcheting up its opposition to excise taxes found in the Senate health care reform bill this week. As Democrats huddle together in Senate meeting rooms trying to hash out a bill that can get 60 votes, organized labor is joining the chorus of opposition to aspects of the Senate reform package on Capitol Hill today with a rally outside the Senate and a print advertising blitz in Capitol Hill newspapers.
The AFL-CIO is among the strongest proponents of health care reform, but the Democratic proposal to impose an excise tax on "cadillac" health care plans to help pay for the reform bill has divided organized labor from its traditional allies in the Democratic leadership for a while now. As Senate negotiations seem to near an end, the unions are to making their case against the excise taxes -- which they say could apply to some health care plans enjoyed by union workers -- yet again.
The Capitol Hill rally today is part of a week-long campaign that included $1.5 million in television advertising and a "fly-in" that brought 175 union leaders to D.C. to lobby Senators to change the bill. Sen. Bernie Sanders (I-VT) will appear at today's rally and is expected to argue the union position in the Senate.
The union message, from the headline on its print advertisements: "Working families need health care reform, NOT higher taxes."
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Silence
December 10, 2009 8:54 AM
No such thing as a free lunch.
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Icon
December 10, 2009 9:10 AM
The problem here is that the excise tax will put negative pressure on health care costs. The House's funding mechanism (higher taxes for the wealthy) won't have the same effect. It's not surprising that unions are opposed to the excise tax, but it is the soundest public policy. It creates a realistic problem for democrats, though, because their political supporters in organized labor want an irrational public policy.
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dustbunny44
December 10, 2009 9:47 AM in reply to Icon
Well, why can't the tax on "cadillac" plans (and would someone please define what one of those is) be levied on total incomes of, say, $150,000 or above? Pick a number to keep the burden off working families.
I get the feeling from this article that someone is using the term "cadillac plan" to keep people who might be workers and already have very comprehensive health care from getting it without being socked with fees. But I'm not sure. We all want very comprehensive health care for all of us. Don't penalize us if we already have it, but please please find a way to tax those with greater than adequate incomes to pay for this stuff. It's high time the tax holiday in this country ended.
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Silence
December 10, 2009 10:47 AM in reply to dustbunny44
Income is income. Whether it comes in the form of health care benefits, stock options, car allowances, expense accounts etc. It's still income.
Income is the sum total of cash and benefits. Add them all up. That's how much you earn.
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Icon
December 10, 2009 3:42 PM in reply to dustbunny44
It can't be limited to people with incomes of $150,000 and above because then it wouldn't be as effective as a financing tool. The "cadillac" plans, in practice, really don't make people any healthier.
Excise taxes on "cadillac" plans are good for two reasons:
1. They discourage people from buying them (and thus create downward pressure on premiums since less people will buy the expensive plans and more people will buy cheaper plans).
2. The people that will still buy them will provide the necessary tax revenue for the other reforms.
Taxing high-income earners only satisfies goal number two, and a mix of them would not generate the needed revenue.
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Cool Blue Reason
December 10, 2009 9:49 AM in reply to Icon
And it's a striking example of short-term thinking. Unions and working people everywhere will benefit more than anyone if the cost growth of health care can be brought under control over time.
Employer spending on health care benefits could otherwise be paid as wages. Rather than putting energy into defending their "gold-plated" insurance plans, the Unions should be working to get employers to sign agreements that any savings from plan changes made as a result of this tax policy will be automatically redirected to employee wages. Or to get something to that effect into the Senate health bill -- not to remove the excise tax.
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mrgc
December 10, 2009 9:49 AM
Is this one of the by-products of Labor negotiating better health insurance packages instead of higher wages? And what's in the "Cadillac" packages that the rest of the world doesn't get? Perhaps Labor should go back to the negotiating table and get better salaries instead of better insurance. It's an unnecessary frill that Labor and Big Business worked out to avoid taxes, and they don't want to lose it. Tough. I've never looked into it, but I wouldn't be surprised if the insurance companies make more off the "Cadillac" packages than the regular schmo policies.
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ShawninMo
December 10, 2009 10:12 AM
So much for not taxing those that make less than $250,000 a year. Not only do we get to keep paying for healthcare for ourselves, but now we get to pay for others as well.
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Economides
December 10, 2009 3:08 PM in reply to ShawninMo
When you tax income, the taxpayer has less of it. When you subject health insurance benefits to taxation it is very likely that the taxpayer will get just as much as he or she had before but pay less for it. Right now, firms are encouraged to spend $130 for a policy that is worth $100 since they can just write off the extra $30. There is little pressure to force insurance companies to give them value for money, and therefore little incentive for insurers to force health care providers to give better value for money.
Unfortunately lots of people are still convinced that more expensive insurance is the same as better health care. Beyond some level of coverage that is simply not the case. It's just more expensive. It's as if I compensated you with a hundred dollars and an apple, just each year I buy you the same apple from a more and more expensive store.
As to your second sentence, I don't really understand it. Are you under the impression that you are not already paying for other people's health care now? Maybe you are sicker than most people and are a net consumer, or you are on Medicare and are being subsidized by workers. Otherwise, yeah, you are paying for other folks and you are paying way too much.
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Indie Pro
December 10, 2009 10:33 AM
"Working families need health care reform, NOT higher taxes."
Right On!
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Economides
December 10, 2009 3:28 PM in reply to Indie Pro
Working families need much better health care for less money. And they need higher wages. having your employer spend your wages on insurance that is way too expensive and does not make you better off is a travesty.
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Gregorios
December 12, 2009 2:13 AM in reply to Economides
As a self-employed person with a modest income, I am truly alarmed by the excise tax on so-called Cadillac health care plans. That tax will hit anyone who has more than a bare-bones plan, at least in higher cost states like Wisconsin. The tax kicks in at $8,500 for an individual and $23,000 for a family. In case you have not checked your pay-stub lately many employers and employees pay more than that for health insurance, and that is for a decent basic plan, not a Cadillac.
As a Wisconsin state government retiree who must still work at age 57, I am fortunate to be able to be part of the state program for which I personally pay $986/month. I cannot afford to pay a punitive 40% tax on top of that. That is cash I pay in to the health care system every month which should be used for health care delivery. If much of that money is siphoned off by the health care delivery system for marketing, profits, and high salaries for health care organization execs, that is what should be crammed down through punitive taxation.
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