Breaking - Union Health Care Plans to be exempted from tax

[grantcart]

http://voices.washingtonpost.com/44/2010/01/white-house-unions-reach-deal.html?wprss=44

White House, unions reach deal on taxing insurance coverage
By Lori Montgomery
The White House has reached a tentative agreement with labor leaders to tax high-cost health insurance policies, sources said Thursday. The agreement clears one of the last major obstacles on the path to final passage of comprehensive health care legislation.

The deal would temporarily exempt union health plans from a significant surtax on unusually generous health policies plans, giving union leaders time to negotiate new contracts, according to sources familiar with the talks. They spoke on condition of anonymity to avoid affecting ongoing negotiations. Additional details of the deal were not immediately available.

The so-called Cadillac tax is a key source of financing for a proposal to dramatically expand health coverage to the uninsured. But it is also an important tool for reining in skyrocketing health care costs, and President Obama has insisted that it be included in the package.

Labor leaders, nonetheless, had threatened to campaign against any health care bill that included the tax. By one analysis, as many as one in four union members could have been affected by the version of the tax approved by the Senate.

snip

Advocates argued that few people would pay the tax, because they would be more likely to choose less costly health insurance policies, a choice that would help drive overall health costs lower. Instead, much of the revenue is projected to come from higher income tax collections as employers shifted resources away from health care and into wages. But skeptics argued that workers might never see the extra money, and insisted on adjustments.




The tax will create a defacto ceiling on the health care industry and benefits will be shifted to income. Better for the workers. It would be interesting to see what adjustments were agreed upon but the article stops there.


On edit.

The reason that unions need the grace period is because they have multi year collective bargaining agreements that can only be changed after the contract is finished.

Non union employees either have annual, "at will", or no contract and can renegotiate their contracts at anytime. They will have plenty of time after the bill passes to renegotiate their benefits and will not need a special grace period.

Temporarily exempting unions doesn't give them any special status it just acknowledges that they have multi year contracts while other employees, typically, do not.

[Peacetrain]

1. All I can say is

I knew it..

[stevenleser]

65. Yup, the writing was on the wall that this is how it would play out...

the Obama haters will have to find something else to be upset about

[Name removed]

76. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Clio the Leo]

2. Another article....

http://politicalticker.blogs.cnn.com/2010/01/14/democrats-labor-unions-reach-tentative-deal-on-cadillac-plans/

[Cant trust em]

3. I'd like to see a list of some of the things these cadillac plans cover

If they wind up covering junk like cosmetic surgery and viagara, then I hope they do wind up being used less.

[LiberalFighter]

37. I doubt that many plans cover cosmetic surgery.

I know when I had surgery on my ears that the insurance denied it as being a covered benefit. But, my benefit rep was able to determine and convince them that it was corrective surgery which is covered. Anyone with good visual awareness would not consider it cosmetic surgery if they knew I had the surgeries.

As for the viagra that is determined by state laws or the wishes of the employers. The benefit of insurance coverage is that contraceptives is also required to be covered in many states. The use of Viagra also encourages men to see their physician when before they ignored the problem. After an appointment with their physician they may be diagnosed for something else.

[Cant trust em]

40. Interesting. Just another case of where online rumor might not meet reality. nt

[LiberalFighter]

44. From American Society of Plastic Surgeons

Reconstructive surgery is generally covered by most health insurance policies, although coverage for specific procedures and levels of coverage may vary greatly.

Cosmetic surgery, however, is usually not covered by health insurance because it is elective. Cosmetic surgery is your choice and not considered a medical necessity.

There are a number of "gray areas" in coverage for plastic surgery that sometimes require special consideration by an insurance carrier. These areas usually involve surgical operations which may be reconstructive or cosmetic, depending on each patient's situation. For example, eyelid surgery (blepharoplasty) - a procedure normally performed to achieve cosmetic improvement - may be covered if the eyelids are drooping severely and obscuring a patient's vision. Or, nose surgery (rhinoplasty and/or septoplasty) may be covered if it will correct a defect that causes breathing difficulties.

[mdmc]

78. A cadillac plan is like my jalopy plan, except with much lower copays

I pay $40.00 per visit (this is good :eyes: as it keeps me from gettin unnecessary treatment).
A cadillac plan would have $5.00 co-pays.

Affordable access to health care = cadillac

[avaistheone1]

4. The Democrats just dodged a bullet.

Applause. :thumbsup: :kick:

[beachmom]

6. No, it is completely unfair to exempt union workers' plans when everyone

else would have to pay.

See my comment downthread for the real compromise.

[grantcart]

9. not true

union plans are multi year collective bargaining agreements and cannot be changed until the end of the contract.

Other employees either have annual contracts or "at will" contracts and can change at any time, therefore do not need any special grace period beyond that of implementing the bill.

[high density]

43. What is the harm of offering the grace period to everybody?

If we need the revenue that bad, taxes need to go up elsewhere in the interim. This is certainly one of the most bone-headed moves by the White House. Out of all these months and months of saying that they're just sitting on the sidelines and it's up to congress, this is a horrible way to enter the fray.

[auburnblu]

81. Then what about income tax rates

The collective bargaining agreement doesn't dicate what taxes the government can apply to earnings and benefits of the union members.

[mgcgulfcoast]

33. i agree. this is disgusting

why do i have to pay when a union member doesnt. everyone pays or no one pays. im sick of being crapped on.

[grantcart]

53. you aren't answered downthread

[beachmom]

5. This article is out of date. Here is the compromise:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aFVMwplL2aDE&pos=9

The White House and labor leaders reached an agreement to resolve a dispute over taxing health benefits, an AFL-CIO official said, a deal that would overcome one of the biggest hurdles to passing health-care legislation.

The agreement, which must be approved by House and Senate Democrats, raises the threshold at which the tax would be applied to the most-expensive employer-provided health plans, said Gerry Shea, the chief health-care negotiator for the AFL- CIO, the nation’s largest labor union organization.

“We wanted to knock out the excise tax entirely, but we weren’t able to do that,” Shea said.

...

Two House aides said the agreement on the so-called Cadillac tax on high-end insurance plans would increase the value of health benefits hit by the levy to $24,000 for families, from $23,000 in the current Senate legislation.

AFL-CIO President Richard Trumka was among the labor leaders who negotiated the accord with the White House past midnight, Shea said.

[grantcart]

8. The link I posted was reported by WAPO after the Bloomberg filing

The Bloomberg simply says that the raised the ceiling from $ 23,000 to $24,000.

I am guessing that is not enough of a compromise to make the unions happy and that both reports actually include elements of the agreeement.


The reason that exemption on union contracts is not unconstitutional and will have little controversy is that they are multi year contracts and cannot be renegotiated until the end of the contract.

Other employees who have annual contracts or "at will" contracts can renegotiate their contracts any time.

The Union exemption will not be controversial as most employees will be happy to get the additional $ 10,000 in personal income that they would get if instead of paying the high end plans they would be the average.

[karynnj]

31. If they are multiyear - the insuror or the employer would have to eat the tax

while the employer would provide the benefits and the wages agreed to. Where do you get the $10,000 estimate of the increase in personal income instead of paying for the high end plans? The high end plan would cost over $24,000.

Are you suggesting that an average plan was $34,000 - and the employer would take a cheaper < $24,000 plan (still almost double the average plan anyone has) and get $10,000 in return?

[Blue State Blues]

13. wait -- the compromise is to raise the threshold $1,000 ?

from $23,000 to $24,000 -- a measly $1,000 difference?!

Please tell me there's more to it than that.

[no limit]

7. Well thats just fucking wonderful. I am really getting to the point where I never vote again fuck it

so just because the unions have a shit load of money they get to be exempt? Meanwhile people like me what aren't represented by big money can go fuck themselves. This is getting absolutely absurd.

[WheelWalker]

10. You have a Cadillac plan?

[no limit]

11. What's your definition of a cadillac plan?

A 1980 Seville is still a cadillac, but anyone with a few hundred bucks can afford it. But you dont really have to answer that as it has nothing to do with my outrage. The point here is that unions, because of the money they control, are getting special treatment. Why?

[bain_sidhe]

22. More importantly, what's *their* definition of a "cadillac plan."

By their I mean the legislators. From everything I've read, it's on price alone. And a lot of the blue-collar workforce is older, meaning their plans might reach into the "cadillac" premium realm without any more benefits than average plans have. The premium is higher because the premium is *always* higher for older workers, and for those in more risky occupations. You know, like occupations that require you to work with and around large machines.

[grantcart]

23. Do you receive $ 24,000 or more in health benefits from your employer?

But the definition of "Cadillac" plans is really off the point.

Since the exemption of unions is only 'temporary' then you are going to have the same tax as the unions.

The reason that it is a temporary exemption is because they have multi year contracts.


Are you saying that you have a multi year contract and you cannot renegotiate with your employer until the year 2014?

[no limit]

45. I dont have a family, so its not $24,000 for me. And again you totally miss my point

If these cadillac plans are so bad why are the unions getting an excemption? As I said its because they have money behind them; whereas someone like me, who doesn't belong to a union, doesn't mean shit to them.

[grantcart]

63. They are getting a TEMPORARY exemption because they have

multi year collective bargaining agreements.


Everyone else is employed either on an annual basis or 'at will' and can renegotiate during their next open season.

[high density]

48. So what are they going to "renegotiate?"

Here are the long term options:

Same health plan, with some tax paid on the plan
Cheaper health plan that is tax exempt
Cheaper health plan that is tax exempt, with their taxable income possibly going up to offset it

Either they will pay taxes on the plan they have now, they will lose coverage they have now, or they will lose coverage and pay taxes on money that they currently don't pay taxes on. The third option seems to be the superior one but the ability of employees to negotiate this in this job environment seems rather difficult, and I doubt we'll often see a $1 to $1 ratio of forfeited health benefits translating into new income for workers. Any way the worker is likely to get screwed.

[grantcart]

12. unions have multi year collective bargaining plans that cannot be changed at will

non union workers have either annual, at will or no contract and can change their compensation now, they don't need a grace period.

[no limit]

14. This isn't about affecting their benefits, its about taxing those benefits

a union contract has no control over taxes imposed. But because of the money they have they get to be exempt from things other people don't.

[grantcart]

19. Kind of pointless discussing it with you

You don't read the article or you don't understand the principle.

They will be negotiating to reduce their Cadillac plans that cost twice the national average and take home more personal income.

from the article:

Advocates argued that few people would pay the tax, because they would be more likely to choose less costly health insurance policies, a choice that would help drive overall health costs lower. Instead, much of the revenue is projected to come from higher income tax collections as employers shifted resources away from health care and into wages.

[no limit]

46. So they will force union members to go to a cheaper plan once their contracts expire?

Is that what you're saying?

[atreides1]

15. Isn't it great?

Unions have loads of money, corporations have loads of money, and soon the SCOTUS will decide if giving cash to politicians is a form of Free Speech.

If you think this sucks, just think how things will be if the SCOTUS decides in favor of the cash=Free Speech idea.

Then there won't be any reason for non-rich Americans to vote, because it won't make a damn difference in the end.

[grantcart]

16. unions have multi year collective bargaining plans that cannot be changed at will

Non union employees typically have annual, at will contracts or no contract at all and can renegotiate their contracts immediately.

Do you always have such a reflexive anti union reaction?

[high density]

51. People can be both pro-union and against giving union members special tax treatment

There would be complete outrage if the White House said that only employees with titles that start with "Chief" (e.g. CEO) could get around this tax for a few years. Since it's involving unions some seem excited by the idea of having a special tax exemption just for them. If they want to give this exemption it should apply for X number of years to everybody.

[krawhitham]

28. Well you could always unionize

[no limit]

47. Lol

[mgcgulfcoast]

49. the whole bill is being written to reward lobbyists

im sick to death of it. i contributed to obama just like unions did. why am i being singled out for punishment?

[grantcart]

52. you aren't

unions have binding multi year collective bargaining agreements and need time to change


non union companies can make the change during the next open season for their health plans.

[mgcgulfcoast]

54. change what?

i am sure they will end up being exempted permanently. union memebers werent the only ones who voted for obama. this whole bill is a joke and i think howard dean was right. why are people who cant afford rich lobbyists in washington being punished?

[grantcart]

67. Every single progressive Senator supports the bill

Did you know that the bill gives the government the power to regulate the profits of health insurance companies in addition to the fees, coverage and MLR?

If every single progressive Senator is for it then you will have to prove that it is a joke.

I have read the bill and it is no joke.

Here are some of the things that make the bill important, what do you disagree with?

http://journals.democraticunderground.com/grantcart/256

[no limit]

55. I asked this above and haven't got an awser yet, maybe you can answer it for me

so the white house, once these contracts expire, will force people to go to different health plans or impose a tax on them? because from what I read thats not it all, they are simply getting special treatment.

[grantcart]

61. there is no special treatment

unions are getting a temporary exemption so that they can renegotiate their multi year contracts.


lets go back to the begining of why the tax is needed.


The insurance industry has for years passed on increases above the inflation rate.

Obviously if you continued to do that for ever 100% of the GNP will be for health care.

The tax draws a line in the sand and says that if you have a plan OVER $ 23,000 A YEAR then you will pay a 40% tax (it is adjusted for inflation).

So the only plans that are facing this are expensive plans that continue to increase over inflation.

In addition to all of the many cost control elements of the health care bill this tax will effectively put a ceiling on how high insurance companies can charge, because basically no one is going to pay a 40% tax on a benefit when they can reduce their plan a little and keep the income.

[no limit]

64. If this is temporary to negotiate contracts then it seems fair.

I somehow missed the word "temprarly" after getting pissed at your thread title, sorry about that.

[grantcart]

66. well alot of people got pissed so obviously my title wasn't very good

[Kurt_and_Hunter]

17. What are the revenue implications?

I realize a lot of union plans will expire before most of this kicks in, but since this was supposed to be a key funding componant I'm curious what the effect is on the overall bill.

[grantcart]

20. The revenue was never going to come from the tax on the plans

The revenue is going to come from employees opting for cheaper plans and taking more income resulting in higher income taxes.

[Kurt_and_Hunter]

27. Okay...

Okay, so what are the revenue implications of fewer employees opting for cheaper plans and thus not taking more income, and not resulting in higher income taxes?

I was just curious how this would affect CBO scoring and how much of a shortfall there might be that has to be made up somewhere to maintain deficit neutrality.

[grantcart]

30. I don't know

But it seems clear that the real benefit is not so much revenue is that it creates a real ceiling so that Health I Companies cannot simply keep increasing premiums above the rate of inflation.

Obviously increasing tax on the top 5% is the most equitable way to raise revenue.

[LiberalFighter]

39. So the employers will voluntarily increase the wages

after they reduce the employees insurance coverage?

[inna]

18. This is a lame half-measure. Tax the rich, and enough with this nonsense. nt

[nightrain]

59. that's it. All this machination to provide exclusions for certain protected

segments of the populace, based on lobbyist money. I'm glad for those who will be exempt, but what about those who won't be exempt? If the principle sucks for some, why not all? Why not just fucking provide health CARE! (Instead of war, for example)

(Oh, too simple, too easy, ruffle too may corporations' feathers!)

[bain_sidhe]

21. "benefits will be shifted to income" - yeah, right.

Or perhaps a better response would be, "whose income?" I'm betting it's not going to be the workers' income. Companies will keep the "savings" from buying cheaper insurance and apply the money to their profits. And the "cheaper" insurance will likely just be a cost shifting to the employee, in the form of higher deductibles and higher co-pays.

It makes me screaming mad that the only thing Obama was willing to take a hard line on is the thing that's most likely to hurt workers.

That said, your point about the "grace period" being needed is well taken. Non-union employees probably won't see any of the "wage increase" this tax is supposed to be enabling, but union workers might see *some* of it, through the power of collective bargining. The grace period gives them a chance to go after that.

[grantcart]

24. Well you seem to be saying that union leaders are not in a position to know what they

are able to negotiate on.


The tax on very high end plans, again over $ 23,000 (affecting only 25% of union families) a year will create a real ceiling for health insurance companies. I think most workers would prefer to get the average $ 13,000 benefit and additional $ 10,000 in personal income.

Insurance Companies will no longer be able to simply pass additional costs on without any consequence.

So if unions were successful in transferring excess benefit income to personal income you would be for that?

[bain_sidhe]

32. No, that's not what I'm saying

You say:

I think most workers would prefer to get the average $ 13,000 benefit and additional $ 10,000 in personal income.

I'm sure "most workers" would, and yes, I'd be for that. I'm saying "most workers" won't see that result. One of the benefits of belonging to a union is that they may be able to get close to that result in collective bargaining. But most blue collar workers aren't union anymore, and they won't see that $10,000. And even union workers may see a lot of the $10,000 go to higher co-pays and deductibles. Only now it will be coming out of after-tax wages, instead of pre-tax wages.

Really, controlling premium costs isn't the way to control health care costs. The "control" has to be placed on provider costs, and there's nothing in the bill that really does that. As long as hospitals and doctors can increase their prices, insurance costs will necessarily have to rise to pay those prices. Having a "pass-through" provision on Insurance companies (that they have to spend a specified percentage of premiums on actual health care costs) won't change the fact that the health care costs continue to rise, and therefore premiums will continue to rise, therefore getting more and more plans closer to that "cadillac" designation.

[grantcart]

38. Controlling premium costs isn't the way to control costs

Agreed

This bill has about 50 different moving parts all designed to control costs.

In order to make sure that HIC don't do an end around and simply pass costs on the tax will create a ceiling to make it impossible for them simply to pass on increases above inflation. It is a necessary addition to the other parts.

The bill contains literally dozens of other provisions for cost containment including changing "fee for service" to outcome based incentives. Despite the fact that these other provisions have been detailed here extensively people still don't get it.

[Vattel]

72. It is very difficult to control costs

when there are many ways to shift costs. And if costs are reduced, this tends to result in benefits being reduced. I know, I'm not an expert and I haven't even read the Bill. So I'm merely expressing general worries here. I do hope that the final Bill works well, and no doubt the Bill will help some people get better access to healthcare, which is great. But I am familiar enough with how often corporations manage to subvert the legislative process to protect their profits to be justifiably worried that this Bill won't ultimately be nearly as successful as I hope.

[LiberalFighter]

41. I would rather pay 15% on wages than 40% on excess insurance costs

[jillan]

25. What about mine? I mean while I am happy for the Unions

I can't help but feel a little selfish... and does this mean we will end up paying more?

[grantcart]

29. Do you receive $ 24,000 or more in health benefits from your employer?

If not then you will not be taxed.

If you do then your company can renegotiate your compensation to reduce your health care and pay you more personal income.

The average plan in the US is $ 13,000 for a family. If you are receiving in 23,000 for a Cadillac plan then your employer can offer you an average plan and you can receive $ 10,000 more a year in personal income.

[jillan]

60. Are you aware that it's not just what the employee pays for the insurance plan, it's the combination

of what the plan costs, ie - what the employer and the employee pay.

I really, sincerely doubt that the company my hubby works for will give him 10k more per year - that company is broke and barely hanging on.

[mgcgulfcoast]

50. most likely

[ProSense]

26. This hasn't been confirmed, but the unions aren't being exempted

They're being given time to negotiate:

The deal would temporarily exempt union health plans from a significant surtax on unusually generous health policies plans, giving union leaders time to negotiate new contracts, according to sources familiar with the talks. They spoke on condition of anonymity to avoid affecting ongoing negotiations. Additional details of the deal were not immediately available.

Which is exactly what should happen.

[grantcart]

36. yes silly me I thought people would read the article

[ProSense]

42. Apparently, from the comments some didn't. Still

this was the point many, including Krugman, were making: that the unions should renegotiate after reform is passed to put an end to these bogus plans.

[Vinca]

34. I hope this doesn't mean that a self-employed person who

happens to be older and have a pre-existing condition and who will easily go above the limit will still be on the hook for a new tax. What a great way to eradicate the entreprenurial spirit. If only union workers are exempted it seems a court challenge would be in order.

[grantcart]

35. A self employed person with a pre existing condition who will easily go above the limit

You don't realize that self imployed older folks with preexisting conditions will be the number one beneficiaries of the bill.


Your preexisting condition will no longer be a factor in determining your premium. You will now be able to go on the national exchange and join a pool of ten million other self employed workers and get a great plan that has its premium set by the OPM.


People in your demographic will be the number one beneficiary of the plan. You should be the most enthusiastic supporter of the plan. Your costs will be significantly reduced in this bill.

[dflprincess]

56. The last I heard age will still be a factor in deteriming costs

and the insurance crooks still have a few years to continue jack up premiums before they have to worry about anyone paying the least little bit of attention to the crap they're pulling.

For anyone who doesn't qualify for a subsidy, odds are their costs (both premium and out of pocket) will go up. Not unlike credit card interest rates went up after "reform" was passed.

[nightrain]

58. yes. That's accurate. Older people can get charged 2-3X what others

are charged. We call that AGEISM.

There's no benefit there, unless you consider that the insurance corps won't be able to charge more than the 2-3 X as they do now. Wow. That's still NOT AFFORDABLE!

[grantcart]

62. age will be but not preexisting conditions

it will still be a huge improvement.


If it makes you feel better consider it a discount for the young.


over 50% of the health care expenses is spent on people 50 and over, it is appropriate that they should carry a bigger burden. This will now be spread out over all of the people over 50 and people with preexisting conditions will not be penalized.

It is not true that if you don't qualify for a subsidy your odds will go up.

Any body who is not part of a group that is judged on their own health and has some significant preexisting condition will see a major decline.

Do you really think that a 50 year old with AIDs is not going to pay a lot less under a plan that cannot discriminate?

[nightrain]

68. why should there be any cost difference to provide CARE for anyone?

Other countries don't make these very stupid decisions. Our healthcare non-system is so dysfunctional, confusing, fragmented, and duplicative. I speak as a practitioner who has to deal with this convoluted mess every day. And I am a patient who has to negotiate the web of care. It's a systemic mess and these proposals/bills only add to the horror. Obama and Congress have only worsened the provision of care to people with these bills. Protecting corporations is not health CARE.

[mgcgulfcoast]

75. i agree with you

so unions are exempt till 2018. we all know it will be made permanent. why am i condsidered to be a 2nd class citizen because im not covered by a union?

[frazzled]

57. Sigh: the tax isn't on people, plus HCR won't let insurers charge for pre-exististing conditions

(Except smoking, and age--though instead of age costing 11x more, as is currently, it will only be 3x more).

I doubt there will be any plan on the Exchange that a self-employed person can buy that will exceed the limit in any way. A current look at the Federal Employee's insurance exchange (which includes members of Congress) lists the very highest plan costing just over $12,000 a year. The limit is going to be 23,000 or higher.

Stop worrying. It's like worrying you'll be subject to the estate tax when you die.

[nightrain]

69. 3X is still unaffordable, but a boon to corporations. The proposals suck.

[applegrove]

70. As long as the rich are being taxed I'm okay with it.

[frazzled]

71. You should change your header

because as you acknowledge in your edit, it's not true that unions will be exempt. This is only a temporary delay.

[Mithreal]

73. Misleading subject line

[Mithreal]

74. Alternative discussion

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4225067

[dkf]

77. I will be interested to see what the cost of taking this out is.

That is the amount they were planning to tax union workers.

[AngryAmish]

79. So I pay more so they don't get taxed?

Puke.

[RepublicanElephant]

80. k&r nt

[auburnblu]

82. Have read through 2018

Is this still part of what was agreed on. If so congrats to the unions.