Excise Tax On Employer-Provided Health Care Plans Update

You may remember my blogging furiously about President Obama's plan to fund his health care giveaway to Big Pharma and the health insurance industry with a 40% excise tax on so-called "Cadillac health care plans" provided to employees by their employers.

Eventually Obama made a backroom deal with labor leaders to get unions exempted from the excise tax for a few years. But by 2017 union members would pay the excise tax on their employer-provided health care plans just like everybody else.

President Obama was obstinate over the excise tax because he thinks it's the best way to hold down health care costs. You see, when employers get nailed with the 40% tax on the plan they're providing to you, they'll do one of two things: a) pass the costs on to you in the form of higher premiums and co-pays or b) drop your "expensive" health care plan for a cheaper HMO.

I was outraged by the president's selling out of the middle class and said so more than once here at Perdido Street School. I called the White House and my reps in Congress repeatedly to let them know how I felt.

But to no avail - the excise tax lived!

I, along with my fellow union members and other working and middle class people with employer-provided health care plans, would help fund Obama's giveaway to the health insurance industry.

The loss of the Senate seat held by Ted Kennedy to a Republican last month put all of that on the backburner, however.

Since Dems no longer have 60 votes to get the plan through a GOP filibuster, the health care reform plan seemed at least temporarily dead in the water.

If the House were prepared to pass the Senate version of the health care bill whole, the plan still could pass, but there are many provisions in the Senate version of the bill that House members have balked at.

The loss of Kennedy's seat further eroded support for the reform bill among Dems, who see it as politically toxic to tax middle class and working class people to pay for the reform.

So nothing has happened with health care reform since the Mass. Senate election.

But Obama hasn't given up on his "reform" measures.

The president has set February 25 as a deadline for a final reform bill to be completed. He plans to have a "bipartisan meeting" at the White House on the day on health care reform and wants to have a bill passed after that.

But the New York Times reports support for the excise tax deal among labor leaders and Congressional Dems has cratered:

WASHINGTON — An agreement to tax high-cost, employer-sponsored health insurance plans, announced with fanfare by the White House and labor unions last month, is losing support from labor leaders, who say the proposal is too high a price to pay for the limited health care package they expect to emerge from Congress.

But the White House is still urging Congress to adopt the excise tax as a way to help pay for President Obama’s ambitious health care proposals.

With support for the tax eroding, Congressional leaders are searching for alternative sources of revenue.

The search has some urgency because Mr. Obama has said he hopes House and Senate Democrats can resolve their differences and come up with a final version of the legislation before he convenes a bipartisan meeting on the issue on Feb. 25.

When the tax agreement was announced on Jan. 14, White House officials described it as a breakthrough that would help clear the way for passage of sweeping health legislation.

Besides producing a substantial amount of revenue, they said, the excise tax on the most expensive insurance plans would slow the growth of health costs by giving consumers a powerful incentive to shop for cheaper policies.

Under the agreement, which builds on a provision in the larger health bill passed by the Senate on Dec. 24, the federal government would impose a 40 percent tax on the value of employer-sponsored health coverage exceeding certain thresholds. To win the endorsement of labor leaders, White House officials agreed to changes in the tax that would lessen its impact on workers, including union members with collectively bargained health benefits.

But labor leaders have backed away from the proposal in the wake of the special Senate election in Massachusetts.

“I do not believe there will be an excise tax enacted,” said Larry Cohen, president of the Communications Workers of America. “It appears that the administration and Congress will be taking a much more modest approach to health care reform. The cost and value of such reform would not justify using an excise tax.”

A wide range of House Democrats continue to criticize the tax as bad policy, even with the changes negotiated by labor leaders and the White House.

Moreover, House Democrats said, the tax is bad politics because it would set the middle class against the poor — people struggling to keep health insurance against people struggling to get it.

Boy, this president is tin-eared and arrogant.

According to the Times article, the White House still believes the excise tax will live in the final reform bill.

He didn't get the message that Americans do not want the very-complicated piece of shit bill passed by the Senate that has plenty of sweetheart deals in it for Big Pharma, the insurance industry and others but doesn't contain any cost-containment initiatives except to have employees with employer-provided health care lose that health care and have it replaced with cheaper and shittier HMO plans.

Here's how the Times article puts it:

Reid H. Cherlin, a White House spokesman, said he was not aware of any erosion in support for the tax among administration officials.

“The president,” he said, “continues to believe that charging insurance companies a fee for their most expensive polices — an idea that has the support of experts from both parties — will help achieve the core goal of health insurance reform: putting downward pressure on long-term health costs while ensuring that we aren’t placing new burdens on hard-working middle-class families.”

But as a practical matter, labor leaders said, the excise tax was killed by the election in Massachusetts, where the Republican candidate, Scott Brown, won the Senate seat long held by Edward M. Kennedy.

In opinion polls and in conversations with lawmakers, Massachusetts voters expressed deep hostility to the excise tax.

Members of union households voted for Mr. Brown over his Democratic opponent, Martha Coakley, according to a telephone poll conducted on election night for the A.F.L.-C.I.O. He won 49 percent of the vote from union households, while she got 46 percent, the survey found.

Michael A. Podhorzer, deputy political director of the A.F.L.-C.I.O., said Massachusetts should be a warning to Democrats, like “a canary in a coal mine.”

“Fully 42 percent of voters believed the health care bill would tax employer health benefits, and these voters supported Brown by two to one,” Mr. Podhorzer said.

Because details of the proposed tax were complex and continually changing, it was difficult for people to know whether they would be affected. Technically, insurers would be responsible for paying the tax, but economists say the cost would be passed on to workers.

Indeed.

It's a shame Obama didn't learn the correct lesson from last month's Senate election in Mass.

But it seems he didn't. He is pushing for the excise tax and his shitty health care reform/giveaway to Big Pharma and the health insurance industry.

He still believes the best way to hold down health care costs is to make sure you have shittier health care.

No wonder Dems are going to lose a shitload of seats in the House and Senate this November.

They deserve to.

I just hope the man who brought all this into being - President Obam - is made to pay for it in 2012 too.