Union Members Exempt from New Health Benefits Tax

Union members and their families who receive healthcare benefits paid for by their employers would be exempted from a new tax on healthcare under one option being proposed by Sen. Max Baucus (D-Mt), according to a report by the Fox Business Channel’s Peter Barnes.  

Baucus’s plan would tax health care benefits to raise from $161.9 billion to $418 billion over ten years to fund the nationalized “government provider” of health care benefits President Obama and Democrats want.  Peter Barnes told me, “There would be preferential treatment for unions” under one version of the Baucus proposal.

As shown on page 3 of the Baucus outline published by Fox News under two of Baucus’ four options, healthcare benefits provided under collective bargaining agreements dated on or before January 1, 2013 would be exempt from the tax.  

Baucus, chairman of the Senate Finance Committee, is taking a very risky path to his bill, which is different from both the Sen. Ted Kennedy (D-Mass) draft and the drafts now being prepared in the House.

As Barnes’ report says the exemption may be essential to passing the bill:

“The tax proposals also likely face strong opposition from some of the President’s and the Democratic party’s key supporters — unions that enjoy more generous health-care benefits won through hard-fought contact negotiations over decades. Apparently anticipating some objections about the possibility of affecting contracts already in place, Baucus has proposed protecting some union benefits by “grandfathering” collective-bargaining agreements existing on January 1, 2013, in his “base plus 10%” and “base plus 20%” options, according to his presentation.

But it’s not clear when or if ever that exemption would ever expire.  Union agreements dated before January 2013 could be extended indefinitely even if other benefits and terms change.  All that’s apparently necessary to perpetuate the pre-2013 date would be to have both parties agree to modifications rather than a new agreement.

This proposal is entirely consistent with the Obama administration’s handling of the GM and Chrysler bailouts which inure to the benefit of the United Autoworkers Union and not to the companies’ shareholders.  It would penalize every non-union recipient of employer-provided healthcare benefits.