Give Unions Cash to Pass a Health Care Clunker
Press reports indicate that Democrats once again acting behind closed doors have struck their latest sweetheart deal" needed to pass a government takeover of health care.
Among other proposed changes Democrats would exempt union members from the new Cadillac" tax on certain insurance policies under Senate Majority Leader Reids bill (H.R. 3590)as a way to blunt unions protest against the health reform plan." If enacted the proposals being considered would impose substantial new taxes on Americans across the income spectrumso a politically favored constituency can receive special benefits:
- As Democrats themselves have admitted this backroom deal would impose higher taxes on middle-class families who are non-union membersall so labor bosses would receive a temporary reprieve on new taxes for their members. Many may oppose this strategy of giving special favors to politically powerful Democrat constituenciesan attempt to divide and conquer the American people in order to enact a government takeover of health care.ii
- · This latest union deal" follows on the heels of other kickbacks included in the bills to protect unionsa retiree reinsurance trust fund and a special provision modifying the Reid bills employer mandate to target the construction industry inserted at the behest of union leaders.
- Press reports indicate the approximately $60 billion in changes to the Cadillac tax" will be paid for by a further unprecedented expansion of the Medicare payroll tax to include non-wage income like dividends and capital gains.
- The higher taxes on capital formation needed to fund this sweetheart arrangement could force firms to lower wages delay hiring or even lay people off.iii As a result union members may keep their current plan for a while longer but lose their joball thanks to Democrats latest backroom deal.
- Proponents of the tax increase on insurance companies have publicly admitted that the Cadillac tax" would raise taxes on middle class families. Thus the underlying Cadillac tax" proposal would break two of then-Senator Obamas central campaign promises: not to tax individuals health benefits and not to raise taxes on individuals with incomes under $250000ivall of whom would be required to purchase health insurance under the Democrat plans.
- The inflation measure for the Cadillac tax" threshold would remain linked to the Consumer Price Index plus one percentage point as in the underlying Reid bill meaning that the tax would hit most Americansincluding union membersover time.
Press reports also suggest that the Cadillac tax" would be modified in several other ways:
- Union membersas well as all state and local employeeswould be exempt from the tax for its first five years until 2018;
- The threshold level for the tax would be raised from $8500 for an individual policy and $23000 for a family policy in 2013 to $8900 and $24000 respectively;
- The cost of supplemental dental and vision coverage would be excluded from the tax threshold amounts beginning in 2015;
- Thresholds may be increased furtherby a formula that has not been publicly disclosedto take into account age and gender a provision that would benefit union plans with high percentages of older workers; and
- The thresholds may also be increased further if health costs rise faster than expecteda provision which some may view as a tacit admission of the criticism of Tom Daschle and others that the bills cost containment provisions would be of minimal value."v
However the gist of the latest kickback remains the same: Americans at large suffer so a politically connected constituency may benefit. Thus many may oppose Democrats latest secret deal as indicative of the larger problems with their government takeover of health carelack of transparency backroom deals higher taxes and crushing new burdens on the middle class.
