October 7, 2009 – Democratic allies of organized labor in the House weighed in
strongly Wednesday against a Senate Finance Committee plan to tax so-called
Cadillac health insurance plans to finance a health care overhaul.
Warning at a press conference that the Senate Finance proposal is a
“non-starter,” Rep. Joe Courtney, D-Conn., sent a letter signed by 157 House
Democrats, including several senior members of the Ways and Means Committee, to
Speaker Nancy Pelosi, D-Calif., urging her to reject excise tax proposals.
The plan pushed by Senate Finance Chairman Max Baucus, D-Mont., would assess a
40 percent tax on high-value insurance plans. The Finance Committee could
approve its draft bill as early as Thursday, sending it to the Senate floor next
week.
The tax has raised concerns among some senators, but it is a central part of
Baucus’ plan to raise the revenue needed to pay for an expansion of coverage to
the uninsured and other key parts of his bill. His effort has been encouraged by
the White House.
Still, the 157 members signing the letter to Pelosi represent a majority of the
House Democratic Caucus. And at the news conference, Courtney and other
Democrats argued that the tax would hit workers — such as firefighters and
police officers, who are often members of unions — whose plans cost more because
they work in high-risk industries, not necessarily because they offer more
generous benefits. The Senate bill, as amended, does set higher thresholds
before the tax would take effect on plans for retirees and workers in high-risk
industries.
Several lawmakers suggested that the tax might go against President Obama’s
pledge not to raise taxes on anyone making less than $250,000 a year.
The letter expresses concern that the “transition relief rule,” designed to
minimize the impact of the tax on states with high health care costs, is
inadequate.|
The letter came as state and local union leaders flew into Washington to lobby
lawmakers on the health care bill. Harold A. Schaitberger, general president of
the International Association of Fire Fighters, appeared at the press conference
and said that the tax could become similar to the alternative minimum tax (AMT)
and trap more and more middle class taxpayers each year under the Finance
Committee plan.
The tax is designed to encourage companies to reduce the value of plans they
offer workers as a way to control health care costs.
The Ways and Means, Energy and Commerce, and Education and Labor Committees have
all approved pieces of the House health care overhaul (HR 3200), and leaders are
working to consolidate those pieces into a single measure in the coming days.
“This tax will not, it’s safe to say, be in the House bill,” Rep. Sander M.
Levin, D-Mich., said. But Courtney said members are “very concerned” that the
language could end up in a final conference report given support for the idea in
the Senate and the White House.
Still, the letter signers were wary of drawing too firm a line in the sand, and
would not pledge to vote against an eventual health care bill that includes the
tax. Rep. Pete Stark, D-Calif., said the letter was meant to “encourage changes
to the bill.”
The Ways and Means Committee-approved health care package does not include a
similar tax; rather, it would impose a surtax on adjusted gross income above
$280,000 for individuals and $350,000 for married couples.
But many Democratic lawmakers objected to the surtax — some of whom also signed
the Courtney letter — and Pelosi has said she would like to see it reduced. She
has also signaled openness to the excise tax. Levin and Stark said that
Democrats are working on three or four options to come up with extra revenue.
