Reply #8: A critique from Time magazine:

[beachmom]

http://www.time.com/time/politics/article/0,8599,1913147,00.html?iid=tsmodule

The idea for an excise tax on insurers was put forth by Finance Committee member Senator John Kerry and modeled on a similar 1994 proposal from Senator Bill Bradley. President Obama has said as recently as July 22 that he's open to capping the tax benefit on health plans in some form.

It may seem like a neat solution to a thorny political problem, but as with every aspect of health reform, it's not nearly that simple. For starters, most large companies (1,000 employees or more) are self-insured, with a private health-insurance company merely acting as the benefits administrator. In these cases, Kerry's proposal would levy the excise tax directly on employers, whose extra cost burden could be (and many say most certainly would be) passed onto employees in the form of higher contributions to premiums, higher deductibles and higher co-pays. "It is not a tax on insurers," says James Klein, president of the American Benefits Council, which advocates for employer-provided benefits. "It is a tax on employers and, therefore, workers."

...

"If people think these Cadillac plans are primarily covering wealthy executives, they are mistaken," says Tom Billet, a senior health-benefits consultant for Watson Wyatt, a corporate consulting firm. In reality, many more of the most expensive employer-based health-insurance plans cover people like the families of New Hampshire state employees who, according to the Boston Globe, have policies worth $20,400 per year. (The employee contribution is $60 per month.)

...

Municipal unions, which in recent years have had more success winning premium health benefits than wage increases, are incensed at the notion that their members could get hit by a new health-insurance tax, even an indirect one. "In our judgment, we think it's inequitable to tax individuals because of who they work for, what they do or where they work," says Chuck Loveless, legislative director of the American Federation of State, County and Municipal Employees. Of the Kerry excise tax proposal, Loveless says, "We're looking at it very closely and we're trying to calculate the cost of excise tax on our plans, but I do know it's going to hit some union plans."

Despite whatever opposition new benefits-tax proposals might face, it's unlikely health-reform legislation will emerge without them.

All of this is really above my pay scale. But the fact is a lot of union members have much better health insurance than most of us do. If this tax goes through, that may affect their calculus on how to negotiate contracts going forward.