Obama to meet with labor leaders to push 'Cadillac' tax in health overhaul legislation

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Jan 11 2010

Bloomberg: "President Barack Obama, facing growing resistance among Democrats over his support for taxing health benefits, will confront U.S. labor leaders and House lawmakers this week on the issue." He will meet with leaders from unions such as the AFL-CIO and the Service Employees International Union at the White House Monday. "House Democrats are siding with labor leaders, with 190 of the caucus's 256 members objecting to the tax, which Senate Democrats are proposing to help fund health-care legislation. Unions have special sway this year: Democrats are depending on them to turn out votes for the November elections." The proposed 40 percent tax would tax high-cost insurance plans worth more than $23,000 for a family and $8,000 for individuals (Jensen and Litvan, 1/11).

The Hill: "The presidents of about a dozen labor unions will meet with President Barack Obama on Monday to push him to limit the scope of a proposed tax on high-cost insurance plans. Labor sources acknowledge they will not succeed in completely eliminating the tax, but they hope to raise its threshold so that fewer labor households feel the impact." Andy Stern, president of the SEIU, told The Hill last week that the final health care reform bill will likely have some form of the tax. "The Senate bill would raise about $150 billion from 2013 to 2019. … Labor officials, citing an analysis by the Joint Committee on Taxation, claim this would hit nearly 31 million households by 2019." The House has proposed a 5.4 percent surtax instead on the nation's highest earners that union leaders say is "all but dead," and union lobbyists are focusing on pressuring freshmen and sophomore "lawmakers facing difficult re-elections" to get support against the "Cadillac" tax (Bolton and Bogardus, 1/11).

Time: "While there are many differences between the two bills, including abortion funding restrictions and Medicaid expansions, the issue now emerging as the major flash point is the Senate's proposed 40% excise tax on high-cost insurance policies. ... At this point, about three-quarters of the House Democratic caucus has signed a letter sponsored by Connecticut Congressman Joe Courtney expressing opposition to the tax. Meanwhile, the Congressional Budget Office says 1 in 5 workers would be affected by the tax in 2016. "Sources on all sides say they believe there ultimately will be a compromise that would maintain the tax but lift the threshold, so that it would be applied to fewer policies. Yet that would leave the question of where to raise the lost revenue; Obama has insisted that any bill that reaches his desk not add to the total federal deficit over the next 10 years" (Tumulty, 1/11).

The Associated Press: Others in Obama's administration are showing flexibility on the issue. "White House economist Christina Romer is indicating a readiness to negotiate a proposed tax on high-cost health plans as a means of financing a health care overhaul. ... Romer [said on ABC's "This Week" that] there could be exceptions made for older workers who rely more heavily on health insurance and those in dangerous jobs such as first-responders in law enforcement" (1/10).

Fox News: "'We feel very confident that — that, based on their numbers, based on the Joint Committee on Taxation's, that the — the Senate version of the bill would genuinely slow the growth of costs over the long run by about 1 percentage point a year, which may sound small, but it's actually enormous. And in terms of what it adds up to over time, it's huge. I think the important thing is, the president, he has made this a priority,' Romer said." Romer was referring in her comments to a Centers for Medicare and Medicaid Services report that said taxes on "Cadillac" plans could help hold down health care costs (1/10).

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.