'Cadillac' tax deal in the works

"Unions tentatively struck a deal Tuesday to exempt collectively bargained healthcare plans from a tax on high-cost plans expected to be used to help raise revenue for the healthcare overhaul," CongressDaily reports.

"AFL-CIO President Richard Trumka, Service Employees International Union President Andy Stern and United Auto Workers President Ron Gettelfinger met with House Speaker [Nancy] Pelosi Tuesday, a day after labor leaders met at the White House to express their opposition to the excise tax. … Exempting collectively bargained plans would appease unions that often offer expensive health plans in lieu of higher wages. The deal could also help Obama avoid breaking his promise not to tax those earning less than $200,000" (Edney, 1/13). 

The president, however, has weighed in more on the Senate's side, in favor of the tax, and in support of a commission with the power to trim Medicare spending, The Associated Press/The Philadelphia Inquirer reports. "The move away from the House approaches is a bow to the influence of Senate moderates who oppose those and other liberal priorities and are critical to Reid's fragile majority in support of the bill" (Werner, 1/13).

The New York Times: "Under the Senate bill, the federal government would impose a 40 percent tax on the value of employer-sponsored health coverage exceeding $8,500 a year for an individual and $23,000 for a family. The bill would make certain allowances for plans covering retirees 55 and older and workers in high-risk occupations. Ms. Pelosi noted that the president wanted the tax. But Representative Jerrold Nadler, Democrat of New York, said: 'The view of many progressives is that the tax is unacceptable. It would affect a lot of middle-income people.'"

"Union leaders said they feared that under the formula in the Senate bill, the tax would hit more and more health plans, which would pass on the cost to more and more workers" (Pear and Herszenhorn, 1/12).

Providing a sense of the tension in these negotiations, Politico reports, "a wave of rank-and-file House Democrats assailed the Senate's tax on high-end health care plans Tuesday night, on the eve of a critical White House meeting with the president." Two Democrats "earned loud ovations after decrying the levy [on costly insurance plans, favored by the Senate] in front of their colleagues" (O'Connor, 1/12).

Roll Call quotes a "Democratic source," who noted unions "are certainly making a lot of noise right now, and they are not being shy about conveying that they will be extremely disappointed if changes aren't made to the bill. We don't want to unnecessarily upset our friends here." Roll Call adds: "Labor bosses appear unwilling to engage the White House or Democratic leaders in possible legislative horse-trading over the contentious revenue proposal" (Pierce and Murray, 1/13). 

Meanwhile, Federal Times reports: "Federal employee groups are urging congressional leaders to reject a proposed 40 percent excise tax on so-called 'Cadillac' health insurance plans. They say the excise tax could apply to federal employees enrolled in the Federal Employees Health Benefits Program's Blue Cross and Blue Shield standard plan. The tax, proposed in the Senate's version of health care reform, would kick in for individual plans with premiums of more than $8,500 and family plans with premiums of more than $23,000 starting in 2013. Sixteen federal unions and employee groups signed the Jan. 12 letter saying the FEHBP's insurance options are in no way excessive and do not deserve to be taxed" (Neal, 1/12).