President Obama Meets With Union Leaders Over Tax on High-Cost Plans

During a private White House meeting with about one dozen labor leaders on Monday, President Obama reiterated his commitment to include an excise tax on high-cost insurance plans in a final health reform bill, but a senior administration official said that the president is willing to amend the proposal to "make this work for working families," the New York Times reports.

The excise tax was included in the Senate health reform bill (HR 3590) but was left out of the House bill (HR 3962) (Stolberg/Greenhouse, New York Times, 1/12).

Under the Senate bill, so-called "Cadillac" plans that cost upward of $8,500 for an individual and $23,000 for a family would be subject to a 40% tax (Haberkorn, Washington Times, 1/12).

Meanwhile, the House bill calls for a surtax on individuals whose annual incomes are greater than $500,000 and couples whose annual incomes are above $1 million to help fund health care reform efforts (Nicholas, Los Angeles Times, 1/12).

Union leaders have criticized the excise tax because unions often negotiate for better health care benefits instead of wage increases. The tax remains one of the top points of contention as House, Senate and White House negotiators work to combine the bills (New York Times, 1/12).

During the meeting, labor leaders also called for the establishment of a national health insurance exchange, rather than the state-based system of exchanges proposed in the Senate legislation (Los Angeles Times, 1/12).

While no decisions or concessions were made, both the White House and labor leaders characterized Monday's meeting as "productive."

AFL-CIO President Richard Trumka said, "It was a frank and productive meeting between friends about moving forward with a health reform bill" (Armstrong, CQ Today, 1/11).

Trumka Warns of Political Consequences of Including Excise Tax

In a speech given earlier on Monday at the National Press Club, Trumka laid out unions' criticisms of an excise tax and warned of the political consequences of including such a tax in a final reform bill, the Washington Post reports (MacGillis, Washington Post, 1/12).

Trumka called the excise tax "a policy designed to benefit elites -- in this case, insurers, hospitals, pharmaceutical companies and irresponsible employers -- at the expense of the broader public" (Los Angeles Times, 1/12).

Trumka continued that the proposal "drives a wedge between the middle class and the poor," adding that "the Senate bill taxes the middle class by taxing workers' health plans -- not just union members' health care; most of the 31 million insured employees who would be hit by the excise tax are not union members" (Werner, AP/San Francisco Chronicle, 1/12).

He also said that Democrats risk a repeat of the 1994 midterm election when they lost their majority after voting for a number of bills that were unfavorable to organized labor (Liasson, "Morning Edition," NPR, 1/12).

Although Trumka did not reiterate a threat he made in September 2009 that unions would not support a final health reform bill, he did say that a reform bill that is not favorable to labor leaders could "suppress votes" from union members. "A bad bill could have that kind of effect," Trumka said, adding, "People could stay home" and not vote (Washington Post, 1/12).

Harold Schaitberger, the head of the International Association of Firefighters, reiterated Trumka's sentiment. He said that Obama's support for the excise tax "is a huge disappointment and cannot be ignored," adding that if the president signs a final bill with the excise tax, "we will hold him accountable" (AP/San Francisco Chronicle, 1/12).