From today’s The Hill comes word that the AFL-CIO has fired another volley across the bow of Senate Democrats on the issue of the excise tax for high-cost health plans:
AFL-CIO President Richard Trumka warned Senate Democratic leaders not to include a tax on high-cost healthcare plans in a bill that is expected to reach the floor in coming days.
Trumka dismissed the notion that Democratic leaders could placate the powerful union by raising the threshold on plans that would be subject to the tax. Under the Senate Finance Committee’s bill, plans costing more than $8,000 for individuals and $21,000 for families would be hit with a 40 percent excise tax.
As others have pointed out, the tax-free status of employer-provided health benefits is a regressive relic that, in an ideal world, we would be jettisoning. Hardly an assault on that system, the Senate Finance Committee’s bill takes modest steps to chip away at it by levying an excise tax on insurers for so-called “Cadillac” plans. The tax would bring in about $200 billion through 2019, making it a vital source of funding for health care.
But labor remains unmoved. Trumka’s statement is only the latest salvo from the unions. In September, AFSCME President Gerald McEntee took to the pages of USA Today to argue against taxing high-cost insurance plans. The unions claim that any tax on such plans would harm middle-class families. Their concerns aren’t entirely unfounded. Middle-class workers in high-risk jobs or high-cost areas might meet the Finance Committee’s $21,000 threshold, making them subject to the tax. (The tax would be levied on insurers, but everyone acknowledges that it would get passed on to employees.) In addition, older workers are likelier to have high-cost plans, making them prone as well.
But a closer look at the Finance Committee’s bill shows that labor’s concerns are overblown. The legislation is studded with exceptions that aim to soften the blow to middle-class workers. For one thing, it sets the thresholds 20 percent higher in the most expensive third of states. In addition, workers in high-risk jobs or 55 and older have a higher cap.
Despite these exemptions, labor isn’t budging — and they have made their influence felt. Earlier this month, 154 House Democrats sent a letter to House Speaker Nancy Pelosi (CA) urging her “to reject proposals to enact an excise tax on high-cost insurance plans that could be potentially passed on to middle-class families.”
One of the striking things about the administration’s approach to policy has been its effort to include all the stakeholders on a given issue, and to urge them to make concessions for the sake of national interest. By making a stand on the excise tax, labor has shown a disappointing unwillingness to make sacrifices for the greater good. It would be a tragedy if reform floundered now because of the unions’ insistence on defending a regressive and unfair feature of our health care system.
