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Grijalva On Exempting Union Health Benefits From Tax: Close, But Not Enough
Rep. Raul Grijalva (D-AZ)
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This morning, I reported that leading labor officials and the White House had discussed the possibility of exempting collectively bargained health care benefits from a proposed tax on high-end insurance policies as a potential concession to secure union support for health care reform.
This evening, in an interview, Rep. Raul Grijalva--the influential co-chair of the Congressional Progressive Caucus--confirmed that the idea, though nascent, is indeed on the table. But though he believes the potential compromise is a step in the right direction, it's still not enough to secure passage of a final bill in the House, where the so-called "Cadillac tax" remains extremely unpopular.
"Given the precedent of fire fighters and police, If there is a collectively bargained agreement on health care that that would be exempt: it's a good step, but it still does not deal with the reality [that] we're dealing with," Grijalva told me. "As much as it's an important gesture to labor, particularly the trades, it continues to be a problem about: [number one] how you're going to administer that...number two I still think we're still dealing with a fundamental problem of creating a real class conflict here between those people that are having to pay, through their taxes, health benefits for those people that have none."
There are other potential fixes on the table to, including raising the threshold on the tax, so it only covers really expensive policies, and indexing the tax to health care inflation, so it doesn't ensnare more middle-class people over time. That would have to be paired with new funding sources to make up for lost revenue, and Democrats are currently considering a number ways to raise the money.
Grijalva says a combination of all the changes on the table could be enough to win his vote. But without those changes, he won't support it, and he says it will be "hard, if not impossible," for the bill to pass in the House.
"At this point, if we're dealing with what we have in front of us, I'm not convinced this is history moving forward," Grijalva told me. "Given the scenario you've just outlined, then perhaps it is a step toward history and many of us would be more inclined."
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David Dunham
January 12, 2010 8:19 PM
This guy's out in space. The bill passed will have to be very close to the Senate bill to keep 60 votes in the Senate.
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jimbomoron
January 12, 2010 9:06 PM in reply to David Dunham
No, the guy just wants to go before the cameras, and would knock over his own grandmother to get before the cameras. He's just grandstanding and he knows it. There's a reason President Obama didn't select the guy for Interior.
But anyhow, here's my idea of a compromise for the Cadillac tax:
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k-town
January 12, 2010 9:45 PM in reply to jimbomoron
This is not serious. Grijalva, a man whose shirt is perpetually rumpled and did not own a tie before his staff - and the Democratic Party - forced him too. He is as low-key as they come. He is a former school board and neighborhood activist (remember, the stuff that made all of you weak in the knees about Obama). When I worked on the Hill, Grijalva could often be found reading a newspaper in the smoking section of the Capitol - a place not only anathema to any politician but most all staffers. Literally, all of the people there are support staff - no politician and very few, if any, of the stuffy staffers who smoke will go in there. Being amongst common folk for congress members and self-important staffers is like going to a leper colony. Believe me, anyone who works in politics will laugh at the assertion of Grijalva as pompous-media hog.
Here is what Grijalva is: very principled. He is not much of a politico but a rooted left-liberal. He has no interest in appeasing people and playing politics. You are more than welcome to disagree with his politics and ideology, but dont confuse him with your favorite politicians - he is not one of them.
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jAZ
January 12, 2010 10:58 PM in reply to k-town
Grijalva is also wildly unafraid of being voted out of office. There's almost nothing he could do to lose in his district. So he's not easily compelled to do anything but what he believes. In this particular case, he's going to be a thorn (some good some bad) in the side of passage of a healthcare bill. Trying to get him and Lieberman on the same page would seem all but impossible.
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JorgeOrwell
January 12, 2010 11:10 PM in reply to David Dunham
And that is why this bill won't and SHOULDN'T be passed. The Senate is packed with folks who have been handpicked by the ultrawealthy.
They aren't to be trusted with the business of the WORKING PEOPLE of this country.
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conniptionfit
January 12, 2010 8:21 PM
Seems to me that the real issue is that we want to tax "cadillac owners" to pay for covering the uncovered, not "cadillac plans". If we'd be honest about the issue, we might be able to get at an honest solution, that wouldn't drag in others that we don't intend to tax. It would be vastly simpler, easier, and more honest to scrap this tax, and raise the top tax on the top bracket a couple of points. Unless you're willing to do that, you're coming at the problem side-ways, and you will inevitably catch those you didn't intend, plus you spend ridiculous amounts of time creating loopholes, and then trying to seal them off again.
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David Dunham
January 12, 2010 8:25 PM in reply to conniptionfit
The Senate will never go for scrapping this tax. The House will have to pass the Senate bill as is pretty much.
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Watt Childress
January 12, 2010 8:35 PM
So now it all comes down to a negotiation between Democrats over their favorite means of taxation?
Even if that is the reality of current leadership, I'm sure many citizens share my objection to a mandate that forces us to buy insurance without providing a robust public option. If passed, a corporate mandate would be worsened by the Senate's reinstalled exemption of health insurance companies from antitrust laws.
For me that would be more than a bitter pill to swallow. It smells of poison.
If this is the best we can get, we better be planning for the next wave of change to correct the problem. And no, I'm not talking about a return to the same old pro-corporate Republicans.
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AnonymousCoward
January 12, 2010 8:47 PM in reply to Watt Childress
If you don't want the mandate, you can't have guaranteed issue. It's really that simple.
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Watt Childress
January 12, 2010 11:55 PM in reply to AnonymousCoward
So I've heard. Another way of saying the same basic thing is: universal health coverage isn't possible through privatization unless we adopt a neo-feudal form of commerce.
http://emptywheel.firedoglake.com/2009/12/15/health-care-on-the-road-to-neo-feudalism/
A great deal of attention was focused on alternatives when lawmakers forcefully opposed a public option. Policy wonks converged and started tinkering with triggers, opt-outs, and whatnot. I've yet to see that kind of attention focused to making a mandate more palatable.
I did read a piece by one of TPM's featured bloggers that discussed a sort of opt-out mandate, but I can't find it now. Would like to read it again, if someone else tracks it down.
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AnonymousCoward
January 13, 2010 7:10 AM in reply to Watt Childress
I don't have time to read the entire article before work, but I can tell you that in the first section, three errors immediately leap out:
1) The out-of-pocket maximum is not an "expectation," but a worst-case scenario.
2) Co-pays are paid to caregivers, not to the insurance company.
3) The insurance company's profits are capped at less than 15% - 85% of all revenue taken in (in the form of premiums) must be paid out in medical care, which means the insurance company then has 15% of its gross revenue to pay for all its operating costs, with the remainder being profits.
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Watt Childress
January 13, 2010 10:51 AM in reply to AnonymousCoward
Thanks for responding. My main reason for posting the link was that I thought the author did a good job of framing the philosophical concerns with a mandate for citizens to buy insurance without a robust public option.
My second point -- that serious attention has not been focused on objections to such a mandate -- reinforces those concerns in my mind.
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AnonymousCoward
January 13, 2010 8:51 PM in reply to Watt Childress
It's unclear to me how this "does an excellent job framing the philosophical concerns," because it reveals a complete ignorance regarding the mandate on the part of the author. The mandate is a natural consequence of guaranteed issue, and any "philosophical concerns" which don't at least speak to that point are fundamentally lacking.
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bluebell
January 12, 2010 8:52 PM in reply to Watt Childress
I trust the Republican Party will be able to make it clear that when the choice came, Democrats chose taxing the middle class.
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Watt Childress
January 12, 2010 9:29 PM in reply to bluebell
Of course they will -- along with other accusations of top-down preference -- if Dems pass the Senate bill without modifications.
And the Dem response will likely amount to -- "but you're way more top-down than us!"
Which is true but pitiful.
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bluebell
January 12, 2010 9:41 PM in reply to Watt Childress
Oh, Dems will say, if it weren't for those over paid union stiffs who won all those quaint and archaic employee benefits, it would be a lot easier to treat you all like the serfs we plan for you to become - you'll all be serfs, but you'll all be equal so it will be fair.
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runfastandwin
January 12, 2010 8:39 PM
I am hoping it turns out the only way to get this thing passed is to force an actual filibuster in the Senate. At this point I cannot see the Democrats giving up, they have invested way too much political capital in this thing. In the end, the only way to get it passed may very well be to force an actual filibuster that runs as long as it takes to make the opposition back down. And if that's the case, we can jettison Lieberman and the Dinos, and get single payer back on the table. I am praying for it.
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Theda Skocpol
January 12, 2010 9:03 PM
The unions and so-called "progressives" who are obessed with blocking excise taxes on high-end employer tax plans are waging a ridiculous side-struggle that endangers all of health care reform.
Let's keep something straight here. For historical reasons that go back to the defeat of universal health reform at the end of WWII, employer benefits, including those won by relatively privileged union workers, enjoy GENEROUS TAX SUBSIDIES -- meaning that all Americans already help to pay for these benefits. That includes millions of Americans who have no insurance themselves; they pay higher taxes to make up for the taxes forgiven on employer and union benefits.
Unions are thus campaigning to preserve their own tax privileges -- they are NOT fighting to prevent taxes on the middle class (as the Ed Show nonsensically claimed tonight). Unfortunately, unions represent dwindling numbers of American workers, a much smaller proportion than after WWII, so there is no way that their pressure to preserve their own tax subsidies is anything but defense of a benefit enjoyed by a few workers at the expense of many.
The more the House pushes and delays over this issue, the more it will endanger the passage of health reform overall, because CBO has scored these excise charges as cost-saving for the economy and public sector over the long run. The CBO will score any new bill again, and if the projected long-term savings disappear, dozens of Congressional votes in both Houses will disappear.
The President cannot compromise any more on the excise tax, or maybe even this much, if health reform is to pass. If reconciled legislation does not pass very soon, it probably will never pass. (And even "very soon" may be sooner than we think, given that the Democrat may not win the special Senate election in MA next week -- so great a mess have Democrats made of domestic legislation over recent months that many weak Dems and Independents are preparing to stay home or vote for a Republican with glossy ads.)
The bottom line is not pretty: a small number of unions with generous tax-subsidized health benefits are endangering reform for all of us. Unions will go down in historical infamy if they cause the failure of universal health reform over this issue.
The fight for a robust public option was a good fight, worth pushing until it could not succeed. And progressives in general should back unions in the struggle for better organizing rights. But this last-minute over-hyped fight over the excise tax is "liberal" special interest politics at its worst.
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Indie Pro
January 12, 2010 11:58 PM in reply to Theda Skocpol
you're cheering the passage of the Baucus bill? The one written behind closed doors by the White House, Pharma, AHIP and Baucus. The bill that leaves the industry outside of tax exemption, the one that fails in actually policing its too few regulations, and tax's the middle class etc?
It's like the democrats want to lose in 2010 and 2012.
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Indie Pro
January 13, 2010 12:06 AM in reply to Indie Pro
ugh, that should not be "The bill that leaves the industry outside of tax exemption,"
but outside of anti-trust laws. My apologies.
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busdrivermike
January 13, 2010 2:26 AM in reply to Theda Skocpol
What a bunch of hooey!
You could equally say that children get less food from the government because of the hiring of airport screeners. Or that people are dying of AIDS in Africa because the government is buying new helicopters to replace Marine One.
There is no link between negotiated union benefits and health insurance for the poor unless you decide to try and thread that specious needle. Doing so will not help your chances of holding Congress with the 16 million union members, many of whom vote Democratic. Not exactly giving them a great reason to show up at the polls in November by taxing their hard earned health care benefits. Why Democrats insist on shooting themselves in the foot at every opportunity baffles me, but calling out your base as having "cadillac" health care plans after they put you in office is the definition of insanity.
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NR
January 13, 2010 3:15 AM in reply to Theda Skocpol
Right. What's one more thing to give up at this point?
We gave up single-payer at the outset, because people like you said it was impossible, even though making a serious push for it might have gotten us a strong public option as a compromise.
Then we gave up a strong public option, because people like you said it was impossible. We accepted a weak, crippled public option instead.
Then the weak, crippled public option was taken away, and people like you said we should just shut up and accept it because we were getting a Medicare buy-in instead. Never mind that that would only help people aged 55-64.
Then the Medicare buy-in went away, and people like you said we should just shut up and accept it because it wasn't that big a deal anyway, even though you'd just gotten through saying that it was justification enough for dropping the public option.
Then lots of other things went away. Drug reimportation. Negotiation for lower drug prices. The end of the insurance companies anti-trust exemption. And every time we lost something, every time the bill turned a little bit more into a worthless corporate bailout, people like you kept saying that everything was fine. And even if the bill wasn't fine, we could fix it later. Of course, you never bothered to explain how the Congress that screwed the bill up so badly in the first place was going to fix it, or how the next Congress, which will have a smaller Democratic majority, is going to fix it.
And now you are telling us to accept an excise tax that will force millions of people (19% by 2016) to either pay a surcharge or get lousier insurance, with more and more affected every year because it's not indexed to health care inflation.
Frankly, the mere fact that this is what the health care debate has come to, is evidence that the entire process has been an unmitigated disaster. And we have people like you to thank for it.
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Steve LaBonne
January 13, 2010 8:44 AM in reply to Theda Skocpol
This may (or may not) have some merit as a policy analysis but politically it's remarkably tone-deaf. Without labor there IS no Democratic party. The party has been playing with fire ever since NAFTA, has been repeatedly burned already, and risks a fatal conflagration if it keeps up this kind of attitude.
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jskdn
January 14, 2010 11:09 AM in reply to Theda Skocpol
" Unions are thus campaigning to preserve their own tax privileges -- they are NOT fighting to prevent taxes on the middle class (as the Ed Show nonsensically claimed tonight). Unfortunately, unions represent dwindling numbers of American workers, a much smaller proportion than after WWII, so there is no way that their pressure to preserve their own tax subsidies is anything but defense of a benefit enjoyed by a few workers at the expense of many."
Theda- that is a pretty good description of what unions are all about. The notion that they any way represent the interest of "labor" when they but are a tiny subset of that group that is glad to sacrifice the interest of the larger group, the majority of Americans, in favor of their own.
The reality is that capping the amount of health benefits that are tax exempt merely partially levels the tax playing field between the tax privileged (many are also government employees who enjoy additional privileges on the backs of everyone else) and the less privileged.
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sunnysteve
January 12, 2010 9:07 PM
Here's an idea: adopt the House version of a surtax on the wealthy, but tie the rate to whatever it costs to pay whatever the private health insurance companies charge to cover insurance for those needing a subsidy. Believe me, that will reduce insurance premiums lickety whiz.
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Zeus
January 13, 2010 4:34 AM in reply to sunnysteve
I like it. By tying the welfare of the impoverished classes to the wealth accumulations of the privileged classes, you've not only helped solve the practical health care funding problem but you've gone some way to resolving so-called class warfare. Of course, this is too brilliant to be used because it calls out the stacked nature of politics in America. Those same wealthy want it all and don't believe they should have to be tied to anyone. They are the same one's benefiting from investing in these health denial (forget "care") corporations which look to maximize profit over providing care. That is why we are in the mess we are in to begin with.
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JorgeOrwell
January 13, 2010 2:03 PM in reply to Zeus
Class warfare? I do get a kick out of this term, though. It's the wealthy who seem to throw it around all the time.
Is that how they see themselves, as "at war" with the rest of us?
Sad.
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bluebell
January 12, 2010 9:22 PM
Blame the Unions! Bash the working class! Down with the stupid working stiff! Their wages are too high! Their benefits are too good! Their pensions are too substantial! They must have less, less, less so the Wall Street bankers can have more, more more.
You have it too good unions! Time to break you up! How dare you organize! You dare you lobby! How dare you expect the benefits you traded for concessions on wages! You lazy greedy bastards. You don't deserve those wages! You don't deserve those benefits! Don't you know we are a nation in decline and the only way the elite can survive is for you to have less!
We need a scapegoat, don't you know, and who better than you, you crumby dirty blue collar creeps who don't even have a PhD!
It's your fault bub. We're coming after your Medicare next and after that we'll be back for your Social Security. And besides we're going to free trade your job to India next week anyway.
Sucker!
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inokeah
January 12, 2010 10:08 PM
If someone give (GIVES) you a Cadillac, you still have to pay for the gas, insurance and resistration. Union workers are the middle top of the middle class. Business agents are paid as mush not a lot less than average Wall Street banker and brokers.
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AnonymousCoward
January 12, 2010 10:18 PM
Heaven forbid we have something that will put some level of downward pressure on insurance premiums. The cost savings wouldn't just vanish, and unions are in the best position to bargain for those savings to be put into higher wages for workers, what with the collective bargaining. It's ridiculous, when you think about it: unions are agitating because they want to be able to spend more on health insurance.
For a more detailed discussion of the issue, I'm just going to leave this here:
http://www.cbpp.org/cms/index.cfm?fa=view&id=2957
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USgreentech
January 12, 2010 10:18 PM
The progressive caucus does not fit that well with the White House. President Obama is too advanced to need their support.
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David Dunham
January 12, 2010 10:51 PM
The House has no cards to play since 60 Senate votes are what is really needed. The Dems in the House will fold and support the Senate bill when push comes to shove. Watch!
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Walter Mitty
January 12, 2010 11:30 PM
This guy is running out of time. Either he makes compromises and gets the final bill voted on or Coakley loses and dems lose their 60 votes in the Senate and either the House Dems accept the Senate Bill as it was already voted on or HCR is killed.
And this guy is talking like he's in the position of power? This HCR doesn't pass and House Dems will be the minority in 2010 and the Obama agenda will be dead.
The house is amateur hour at a comedy club.
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Indie Pro
January 13, 2010 12:04 AM
This guy is actually fighting for the good, and democrats are tearing him down. Liberals/progressives have no place in the democratic party. It is center right and conservative.
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Indie Pro
January 13, 2010 12:05 AM in reply to Indie Pro
look at the comments in this thread saying the progressives need to shut up and go along with the conservatives. Simply ugly.
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Watt Childress
January 13, 2010 12:23 AM in reply to Indie Pro
Agreed. And to show it is possible to drop a positive note in here, I read the following in an AP article just posted by JM.
"Officials said Obama has indicated support for a national version of the exchange — a clearinghouse where consumers could shop for health coverage. He also is signaling support for ending the decades-old antitrust exemption enjoyed by insurance companies. On those two issues the president is siding with House Democrats over their Senate counterparts."
Good news on both fronts if he sticks to his guns.
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magurakurin
January 13, 2010 5:47 AM
I don't understand why health care benefits aren't taxed all across the board. It's income. I worked for many years and sent a check to an insurance company for health care coverage. In that time I never was lucky enough to have a job that American society deemed health care worthy. The money to the insurance company came out of my income, that I had to pay tax on first. Yet, a worker getting part or all of that premium(and on a better policy) paid by his employer gets that money tax free. The fact that the worker never actually has the money in his bank account really is of no material difference. It really is a basic inequity in the entire system and I'm guessing most of the people who are seeing this as a great injustice are receiving this very same tax free income.
America is fucked. The obvious solution was to start single payer and just send everyone a tax bill for their basic coverage and then let the insurance companies switch their business over to provide coverage over and above the single payer basic coverage. But there isn't the political will among the politicians or any sense of unity among either the right or left members of the population. The left fights as bitterly(maybe more so) amongst itself as it does against the right. All this combined with an utterly disfunctional upper house has made America ungovernable. No one outside its borders would care but for 7 or 8,000 thermonuclear weapons. A Sarah Palinesque figure will eventual come to power and then, pow Alice, to the moon. When is that Maya date for the end...hmmm...2012?
I'm going surfing, fuck it. Good luck people. My suggestion is to emmigrate. It worked for me
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Steve LaBonne
January 13, 2010 8:42 AM in reply to magurakurin
The left would have united as one person behind a single-payer plan, had one ever been genuinely on the table.
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Elizabeth2
January 13, 2010 9:05 AM in reply to Steve LaBonne
And, in the very unlikely scenario where the left "unites as one person" on ANYTHING (something I increasingly doubt), we would have been sitting all alone by ourselves out in the middle of the field, watching yet another chance at health care progress go down the tubes. Doesn't feel like much of a victory plan to me.
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Steve LaBonne
January 13, 2010 9:18 AM in reply to Elizabeth2
No, by uniting behind what we really wanted we could have forced a GENUINE compromise.
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AnonymousCoward
January 13, 2010 8:59 PM in reply to Steve LaBonne
How? What leverage would we have with which to "forc[e] a GENUINE compromise?"
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KarenJG
January 13, 2010 3:39 PM
I actually kind of like this... it might lead to an increase in unionization down the road. I'm still on the bubble about the whole bill, mind you, but providing workers with an incentive to unionize, instead of a disincentive, ain't all bad.
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