Democrats Exempt Unions from Benefits Tax; Senate Race Might Kill Bill
Jan. 15, 2010 – Democrats have cut yet another political deal to move forward with health care reform efforts by exempting union members from paying a 40 percent tax on so-called “Cadillac” health insurance benefits, but a pending U.S. Senate special election might kill all efforts.
The exemption was agreed to as Congressional leaders met with union officials and others behind closed doors during a 15-hour negotiations session in the White House on Wednesday. Union officials had threatened to withhold support of Democratic efforts to reform the United States’ $2.5 trillion-a-year health care system if they levied a 40 percent excise tax on generous group health care benefits.
Labor unions opposed the measure, saying their members accept lower pay in exchange for better benefits packages. The proposed 40 percent excise tax essentially is a tax on middle class families, and union members would have paid an estimated $60 billion over the duration of the tax.
But Congressional Democrats meeting with union representatives behind closed doors agreed to exempt union members from paying the so-called “Cadillac tax” on costly health care benefits until 2018. The deal means union members would be spared paying the estimated $60 billion in taxes while other working families would have to pay up to $90 billion in additional taxes simply for not being members of a union subject to collective bargaining agreements.
Lawmakers also agreed to exempt the dental and vision plans for collective bargaining units from the 40 percent excise tax, which would be levied on health insurance benefits totaling at least $8,900 annually for individuals and $24,000 annually for families. The annual benefits threshold will be even higher for health insurance plans with higher percentages of older workers and women, according to new reports.
Among union leaders participating in the secret discussions were Service Employees Union chief, Andy Stern, and AFL-CIO President Richard Trumka. Union officials representing teachers, food and commercial workers, electricians and government workers also participated in the marathon, private negotiations.
President Obama claims the excise tax would decrease health care costs by forcing health insurance companies to offer more affordable group health insurance plans to prevent paying the 40 percent excise tax. Congressional Democrats are trying to iron out differences between health reform measures approved separately in the U.S. Senate and House of Representatives. A compromise measure might be ready before the President delivers his annual State of the Union Address in late January or early February.
But even if Senate and House Democrats manage to craft a compromise measure, Tuesday’s special election to replace the Massachusetts Senate seat formerly occupied by the late Edward Kennedy might nix all agreements. Recent polling shows Republican Scott Brown has taken a slight lead over Democrat Martha Coakley.
If Brown wins, Democrats no longer would have the necessary support to defeat a Republican filibuster in the U.S. Senate. Congressman Barney Frank (D-Massachusetts) said a win for Brown would “kill the health bill,” and President Obama has gone to Massachusetts to campaign for Coakley during the final days before the special election.
Senate Democrats Plan Xmas Eve Health Care Vote
Dec. 18, 2009 – Already having infuriated many would-be supporters as well as opponents for holding secretive meetings and making back-room deals, U.S. Senate Democrats have planned a Christmas Eve vote on their version of national health care reform.
The move comes as labor unions refuse to endorse the Senate’s plan to reform the $2.5 trillion-a-year U.S. health care system. Unable to secure the 60 votes necessary to advance proposed health care reforms, the Senate has dropped a proposed public health care option as well as a compromise lowering of Medicare eligibility to age 55 from its current age 65 minimum enrollment age.
Liberal Democrats say a government-run public health care option is critical while more conservative Democrats are concerned about potential federal funding of abortions and middle class tax increases.
The Senate’s proposal requires all American citizens purchase health insurance and creates regional insurance exchanges where individuals can shop for health insurance coverage tailored to more specific needs. People earning too little to afford health insurance would receive federal subsidies to purchase coverage.
Some 17 new taxes have been proposed to pay for the estimated $849 billion cost of initiating the Senate plan over a 10-year period.
Among taxes proposed to pay for the Senate version of national health care reform is a “marriage penalty” levied on “families” earning at least $250,000 per year. Because the tax on individuals isn’t levied until their annual income levels reach at least $200,000 while married couples would be taxed on dual incomes of $250,000 or more, opponents have dubbed the proposed tax a “marriage penalty.” The “marriage penalty” would not be assessed unless both spouses earn at least $150,000 per year, but an unmarried couple living together and earning the same amount would not be taxed until their individual incomes reach at least $200,000 annually.
Other proposed taxes include a 5 percent tax on elective plastic surgeries – popularly called the “Botox tax” – and levying a 40 percent tax on individuals with “generous” health care plans. Whether such a tax would be levied only on benefits received as an employee or on any “generous” health care plan – whether purchased individually or through a group plan – is yet to be determined in the Senate’s more than 2,000-page version of national health care reform. The Senate plan also would increase the Medicare payroll tax on high-income employees.
Officials representing two labor unions, the A.F.L.-C.I.O. and the Service Employees International Union (SEIU), yesterday announced they do not support the Senate health care plan in its current form and instead favor the version proposed in the House of Representatives, which includes a public health care option. Union officials said they will continue demanding a public health insurance option in the Senate version before endorsing the plan.
Although the two labor unions failed to support the current measure, officials for the left-leaning Families USA consumer advocacy group yesterday announced their support for the Senate health care plan to be voted on Christmas Eve.
Labor unions are not the only ones dropping their support of the Senate’s national health care reform efforts. Several recent public opinion polls indicate more Americans oppose current health care reform efforts than support them.
A recent poll by Rasmussen Reports indicates public support for federal health care reform has hit an all-time low. Some 56 percent of those polled oppose federal health care reform efforts while only 38 percent indicated support. The support of federal efforts hadn’t dipped below 41 percent in prior Rasmussen Reports polling.
The Rasmussen survey also indicates most people don’t think reform efforts will help. Some 54 percent of those polled said the Senate and House bills would harm and not help health care, and 60 percent said the federal legislation likely would increase costs for everyone. Only 16 percent of those polled believe Congressional reform efforts will lower costs.