Labor wins big in new healthcare compromise

WASHINGTON -- The White House and congressional leaders 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, reports The New York Times.

Facing intense pressure from organized labor, the Obama administration reportedly has agreed to major changes in the proposed tax on those 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.

Labor leaders hailed the deal and said they were prepared to fight for passage of the legislation.

Richard L. Trumka, president of the AFL-CIO, told reporters that the new threshold for the tax would be $24,000 for families and $8,900 for individuals. The Senate bill called for a threshold of $23,000 for families and $8,500 for individuals.

The new threshold, said Trumka, 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.

Vision and dental care insurance would be exempted from calculations beginning in 2015.

He said also that there would 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 tend to have higher health premiums than other workers. There would also be adjustments for those living in high-cost states.

The Congressional Budget Office has projected that the excise tax, as included in the Senate bill, would raise $149 billion over 10 years. 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 Trumka. "If it does that, then hopefully no American will bump up against the excise tax."

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 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."

(The preceding article was published by The New York Times.)