Friday, January 15, 2010

Updated: Labor Leaders Describe Excise-Tax Deal

Updated: Labor Leaders Describe Excise-Tax Deal

Facing intense pressure from organized labor, the Obama administration has agreed to major changes in the proposed tax on high-priced employer-sponsored health benefits.

One change, according to labor leaders involved in the negotiations, is that workers covered by collective bargaining agreements, as well as state and local employees, will be exempted from the tax until 2018.

“We tried to figure out how to have a health plan that was accessible and affordable and that made a difference for working families in this country,” said Anna Burger, chairwoman of the Change to Win labor coalition. The new compromises, she added, help to “make sure that workers who have good health care will be able to continue having good health care” without having their costs or taxes raised.

Richard L. Trumka, president of the AFL-CIO, also provided additional details in a conference call with reporters this afternoon:

The Senate bill would have imposed a 40 percent tax on the amount of policies for individuals above $8,500 and family plans above $23,000. The new threshold for the tax would be $24,000 for families and $8,900 for individuals.

The threshold would be increased each year by the amount of the rise in the Consumer Price Index plus 1 percent — that’s the same rate of indexation called for in the Senate bill.

The formula will be adjusted for inflation from 2010 to 2013. The initial inflation threshold period will be adjusted upward if inflation increases above current assumptions.

For high risk professions, the threshold would increase to $27,000.

There would also be adjustments creating higher thresholds for employee groups whose health premiums are higher because the groups contain a disproportionate percentage of older workers and women. Those two groups tends to have higher health premiums than other workers. There would also be adjustments for those living in high-cost states.

As of 2015, dental and vision costs would not be counted toward the threshold.

Collective bargaining plans were to have been excluded from the exchange.

Starting in 2017, collective bargaining agreements at all levels will be able to participate in the exchanges.

The Congressional Budget Office has projected that the excise tax, as included in the Senate bill, would raise $149 billion over 10 years. Mr. Trumka estimated that the new changes would reduce that figure by about $60 billion.

“We’re hoping all the cost containment in [the bill] will start to ratchet down on health care costs,” said Mr. Trumka. “If it does that, then hopefully no American will bump up against the excise tax.”

According to Mr. Trumka, administration officials reached the agreement with labor leaders early Thursday morning after 15 consecutive hours of talks in the Executive Office Building.

By exempting labor unions from the tax until 2018, the administration could greatly reduce resistance to the tax from an important part of the Democratic base.

Unions asked for a delay in being covered by the tax so that they would have time to negotiate for their workers to achieve health savings and have cheaper health plans before 2018.

“This is good for all working Americans, not just union people,” said Mr. Trumka of the proposed changes. “This makes this bill more fair for them. The labor movement has been fighting for health reform for 60 years. We’re not about to let the naysayers stop us from getting there.”

“The president and his entire staff has worked with us on this,” he added. “He’s proven to be a friend of working people on this. I believe in the election of 2010 and 2012, we will be able to motivate not just our members but working people, because this bill will bring health care to working people and bring costs down.”

One of the biggest differences between the House and Senate versions of the legislation is how they would pay for the nearly $1 trillion, 10-year cost. The excise tax is the biggest new revenue-raiser in the Senate bill. The House bill would impose an income surtax on individuals earning more than $500,000 and couples earning more than $1 million.

The House Speaker, Nancy Pelosi, and the majority leader, Representative Steny H. Hoyer, Democrat of Maryland, said on Thursday that the final version of major health care legislation will be posted on the Internet for 72 hours before the House votes on the measure.

Thanks to the Internet, the public has had the opportunity to get a detailed look at the health care legislation throughout the legislative process. Of course, having access to the legislative text and being able to make sense of it are two different issues.

White House and Congressional leaders are trying to negotiate the final differences between the House and Senate versions of the legislation. An overall deal could come together within the next few days.

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