Labor Leaders Oppose Obama's 'Cadillac' Healthcare Tax

Labor leaders were summoned to the White House yesterday to meet with the President behind closed doors for yet another health care bill arm-wrenching session, Chicago-style.  The labor groups are adamantly opposed to the proposed tax hike of up to 40% on “Cadillac” health care plans passed by Senate Democrats in their version of the health care bill.  President Obama has endorsed this new tax on health care benefits.  

Richard Trumka, president of AFL-CIO, spoke at the National Press Club in Washington prior to the White House meeting saying that this unprecedented tax on health benefits “pits working Americans who need health care for their families against working Americans struggling to keep health care for their families.”

Union members are among those who are provided with these high-end health care plans by their employers.  The 40%  tax would be imposed on the value of any health insurance plan in excess of $8,500 for an individual and $23,000 per family.

Rep. Dave Camp (R-Mich.), top Republican on the House Ways & Means Committee, provided information yesterday from three separate non-partisan government entities.  According to these studies the new tax scheme will result in higher health care premiums, more out of pocket expenses and cuts in benefits.  

The three non-partisan entities, the Office of the Actuary (OACT) at the Centers for Medicare and Medicaid Services (CMS), the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT), all say that millions of Americans will feel the impact of this new tax that would hit middle-class American families the hardest.

According to a CMS/OACT analysis (pdf) of the health care bill passed by Senate Democrats and endorsed by President Obama, the new tax will impact one in five Americans by the year 2016.  

When the CBO was tasked to look at a substantially similar bill (pdf), they found the tax scheme would result in 30 million Americans who currently have employer-provided insurance paying the new tax by 2016.  The number of people subject to the new tax each year would continue to grow as the cost of health insurance by design will increase at a faster rate than the taxable premium threshold resulting in more and more Americans being pushed above that taxable threshold.

The JCT analysis reveals that as more and more Americans are sucked into the 40% health insurance tax scheme, by 2019, four times the tax money pours into government coffers than is raised in 2013 ($8.7 billion vs. $30.5 billion).  The JCT also found in this analysis that by 2019, the average family with an income between $50,000 and $75,000 would pay another $1,000 in taxes each year.  In addition, by 2019, 84 percent of revenues raised from this new tax as well as 90 percent of those footing this new tax burden would be the very middle-class families the president promised would not see a tax increase.

 “Middle class families are going to pay twice under this bill — higher premiums and higher taxes,” Rep. Camp (R-Mich.), told HUMAN EVENTS.

Camp also took a look at data derived from the Medical Expenditure Panel Survey (2008) and provided a rundown of the states with the most expensive health insurance premiums.  Residents in these states would likely be hit the hardest initially as the costs of health insurance premiums vary substantially across state lines.

The states with the most expensive employer-based premiums for individuals are: Alaska, New Hampshire, Rhode Island, Maine, Vermont, West Virginia, District of Columbia, Massachusetts, New Jersey and Wisconsin.

The states with the most expensive employer-based costs for families are:  Massachusetts, Minnesota, New Hampshire, Indiana, Connecticut, District of Columbia, Delaware, Alaska, Rhode Island and Maine.

The Wall Street Journal reports that Monday’s White House meeting included Trumka; Anna Burger of Change to Win; Dennis Van Roekel of the National Education Association; Leo Gerard of United Steelworkers; Joe Hansen of the United Food and Commercial Workers International Union; Ed Hill of the International Brotherhood of Electrical Workers; Jim Hoffa of the Teamsters; Randi Weingarten of the American Federation of Teachers; Andy Stern of the Service Employees International Union; Terry O’Sullivan of the Laborers’ International Union of North America; Gerry McEntee of the American Federation of State, County and Municipal Employees; and Larry Cohen of the Communications Workers of America.

No resolution was reached at yesterday’s closed-door meeting at the White House.  Should unions pull their support for health care reform, it could kill the bill.

The House-passed version of the health care bill levies job-killing taxes on small businesses to pay for the Democrats’ health care boondoggle.  This tax scheme was rejected by the Senate.