Unions Rally to Oppose Proposed Tax on Health Insurance

When millions of blue-collar workers were leaning toward John McCain during the 2008 campaign, labor unions moved many of them into Barack Obama’s column by repeatedly hammering one theme: Mr. McCain wanted to tax their health benefits.
But now labor leaders are fuming that President Obama has endorsed a tax on high-priced, employer-sponsored health insurance policies as a way to help cover the cost of health care reform. And as Senate and House leaders seek to negotiate a final health care bill, unions are pushing mightily to have that tax dropped from the legislation. Or at the very least, they want the price threshold raised so that the tax would affect fewer workers.

Labor leaders say the tax would hit not only wealthy executives with expensive health benefits, but also many rank-and-file union members who have often settled for lower wage increases in exchange for more generous health benefits.

The tax would affect individual insurance policies with annual premiums above $8,500 and family policies above $23,000, which by one union survey would affect one in four union members.

The House bill does not contain such an excise tax, and many House Democrats oppose adding it to the combined House-Senate legislation. But the tax is a critical revenue component in the Senate’s bill. If the bill does too little to cover its costs, it might be defeated. Many economists support the tax, saying it will help hold down costs.

With labor groups warning that the tax will infuriate a key part of the Democratic base — union members — President Obama has agreed to meet with several top labor leaders on Monday to address their concerns and try to defuse their anger. The group includes the presidents of the A.F.L.-C.I.O., Teamsters and the steelworkers’ and service employees’ unions.
But whether the tax is negotiable remains unclear. Not only has Mr. Obama specifically endorsed the idea, but the White House and Senate leaders see the tax as pivotal in paying for the health care overhaul and addressing runaway health care costs.

Many Democrats and union officials fear that if both sides dig in on the issue, it could create a rift between the White House and labor — with some union leaders hinting they might lobby aggressively against the entire health care bill if it contains such a tax.Union leaders have repeatedly warned the White House about the strong rank-and-file dismay, which could hurt the Democrats in Congressional elections this fall, especially in battleground states like Ohio, Pennsylvania and Wisconsin.  (continues here)