White House Cuts Tax Deal on 'Cadillac' Health Plans

Thursday, 14 Jan 2010 01:20 PM

 

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The White House reached a tentative agreement with union leaders early Thursday to tax high-cost insurance plans, officials said, removing one of the major stumbling blocks in the way of a final compromise on comprehensive health care legislation sought by President Barack Obama.

Complete details of the tentative deal were not immediately available, although the White House was expected to present it to senior lawmakers later in the day. Union leaders were also returning to the White House.

Rep. Joe Courtney, D-Conn., who led the opposition to the tax in the House, said the agreement involves several measures that would ease its impact. Among them: excluding the value of dental and vision benefits in applying the tax, as well as raising the $23,000 threshold at which it would take effect for families to $24,000. According to Fox News, the exemption for single Americans with high-value plans would be $8,500.

Union officials are also pushing to provide that anyone who makes $200,000 or less would be excluded from the health plan benefits tax, a concession that would benefit employees who are not unionized as well.

In a win specifically for union members, negotiators were working out a plan to delay the tax from being imposed on collectively bargained health plans for several years. A senior Democratic official told Fox News that state and local workers, as well as union members, would be exempt until 2017.

Fox News also reported that union leaders aren't thrilled with the deal, although it's an improvement from an earlier plan. Also that "The value of the plans that are taxed would be indexed to the consumer price index plus 1 percent, meaning over time more and more people would be affected by the threshold than would be if the tax had been indexed to healthcare inflation."

Union and Democratic officials spoke about the tentative deal on condition of anonymity because the talks were private.

"This was a very critical issue that had to be resolved, and I think it has been," said Rep. Rob Andrews, D-N.J.

The agreement with labor came as the White House sought fresh concessions from drugmakers and other healthcare providers as they looked for funds to sweeten subsidies the bill provides for lower-income families who cannot afford coverage.

Senior Democratic lawmakers who spent hours at the White House on Wednesday rearranged their schedules to return at mid-afternoon, and Obama planned to address a closed-door meeting of the House Democratic rank and file in late afternoon.

One participant in the overall talks, Rep. Charles Rangel, D-N.Y., said, "We're shooting for tomorrow" for an agreement in principle that would cover key issues such as how many Americans would get coverage, and how to pay for it. Certain issues, including restrictions on taxpayer funding for abortion, would be resolved later.

White House spokesman Robert Gibbs told reporters that the Obama administration and Democratic leaders are "very, very close" to resolving remaining obstacles to healthcare legislation.

No final votes could occur in the House and Senate until the Congressional Budget Office provided a formal estimate on the cost and impact of any bill, a process that could take days.

The breakthrough on the insurance tax marked a victory for the White House, which has long sought a tax on high-cost, employer-provided plans as a way of curbing the rise in healthcare expenditures. Organized labor — backed by its allies in the House — had opposed it, arguing the impact would fall heavily on workers whose bargaining contracts gave them more robust healthcare coverage.

Officials said the agreement was thrashed out over more than 15 hours of negotiating at the White House, ending after midnight. Participants included AFL-CIO President Richard Trumka; Andy Stern, head of Service Employees International Union; Anna Burger, head of Change to Win, and the leaders of unions representing teachers, government workers, food and commercial workers and electricians.

Obama's deputy chief of staff, Jim Messina, was the lead White House bargainer, although Vice President Joe Biden also was involved periodically.

If it holds, the tentative deal should ease concerns among labor friendly lawmakers in the House, and also permit the White House and senior Democrats to move quickly through numerous other decisions as they drive for a compromise on the overall healthcare bill.

House Democrats are uneasy over concessions they are being asked to make to preserve the 60 votes needed to pass the bill in the Senate. That includes dropping the government-run insurance option liberals have fought for and accepting some form of the high-cost health insurance plan tax.

House Democratic leaders are pushing for more generous subsidies to help make health insurance affordable to a greater number of middle-class households, as well as other concessions.

To help pay for that, Democrats want healthcare providers to bear more of the cost, said lobbyists speaking on condition of anonymity because conversations within the industry were confidential. One said Democratic proposals include adding $10 billion to the $80 billion over 10 years that the drug industry had agreed to contribute, and raising the $20 billion in Senate-approved fees imposed on medical device makers by $10 billion.

Susan Feeney, spokeswoman for the American Health Care Association, said Wednesday that White House and Senate officials recently have asked the nursing home industry to agree to additional concessions.

Rep. Frank Pallone, D-N.J., a senior member of the Energy and Commerce Committee, predicted Thursday that despite numerous complaints from rank-and-file House Democrats about losing liberal priorities in deference to a handful of Senate moderates, the House ultimately would sign off on the deal taking shape at the White House.

"The goal is to get it finalized and voted on in the next few weeks," Pallone said.

The House and Senate passed the bills with just one Republican vote, and the GOP was not invited to the White House talks. Republicans say they still have a chance to derail the bill.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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