Democrats appear to reach deal on 'Cadillac' tax

The New York Times is reporting that Democratic congressional leaders and President Barack Obama "have reached a tentative deal on a proposed excise tax on high-cost, employer-sponsored insurance plans to be included in the final version of major health care legislation, according to officials familiar with the talks." Details of the compromise were not available.

One possible change: The threshold for taxing policies may be increased. As written, the Senate's legislation would tax plans that cost more than $8,500 for individuals and more than $23,000 for families. Labor groups have opposed the tax, saying it would "hit many union-sponsored health plans and force an increase in medical expenses for many middle class families" (Herszenhorn, 1/14).

The Washington Post says the deal involved more than changing thresholds: "The agreement clears one of the last major obstacles on the path to final passage of comprehensive health care legislation. The deal would temporarily exempt union health plans from a significant surtax on unusually generous health policies plans, giving union leaders time to negotiate new contracts, according to sources familiar with the talks" (Montgomery, 1/14).

However, Politico reports, "AFL-CIO spokesman Eddie Vale said reports of a deal were 'false,' and negotiations were ongoing. Rep. Joe Courtney (D-Conn.), who has led the House effort against the tax, said he was not aware of a deal, and had not seen a proposal from labor or the leadership.

Politico also explains how the news got out: "House Speaker Nancy Pelosi has told colleagues that organized labor struck a deal with the White House on the excise tax, said Rep. Lynn Woolsey (D-Calif.), who spoke with the speaker during the party's annual issues conference Thursday in the Capitol Visitor Center." (O'Connor, 1/14). 

The Hill earlier reported that one key participant in the talks is also suggesting a deal: "Democrats are 'close' enough to an agreement on how to pay for a healthcare bill that they're shooting for sending language to congressional number crunchers on Friday, House Ways and Means Chairman Charles Rangel (D-N.Y.) said Thursday." The Hill reported that other House Democrats had said "significant headway had been made on the tax issue, with some saying they've been told that a deal had been struck with labor groups to raise the excise tax threshold to a level that would allay union concerns. ... Rep. Lynn Woolsey (D-Calif.) said Thursday that House Speaker Nancy Pelosi (D-Calif.) had moments ago told her that a deal had been made with labor groups on the excise tax. 'This just shows you that unions really do still matter,' Woolsey said" (Allen, 1/14).

The Hill, in a separate story: In recent health reform talks, White House officials have "steered healthcare negotiations over the most controversial disagreements between the Senate and House in favor of Democratic centrists." In addition to the President's position in support of placing a tax on high-cost insurance plans, "White House officials have also told news organizations that the president supports the Senate plan to create a commission to recommend Medicare spending cuts, a proposal that House Speaker Nancy Pelosi (D-Calif.) has opposed" (Bolton, 1/14).