Report: Labor unions cooling on tax deal

Labor leaders are shying away from a deal they struck with the White House on a tax on high-cost insurance plans, threatening President Barack Obama's plan to get the stalled healthcare reform bill back on track, according to a report in The New York Times.

In the days leading up to a Feb. 25 bipartisan healthcare summit, Obama has been encouraging Democratic congressional leaders to speed up their efforts to hash out the differences between the House- and Senate-passed versions of the legislation. Obama's game plan depends heavily on building upon the negotiations he brokered between House and Senate leaders during talks at the White House last month — and on an agreement he devised to get union backing for the excise tax on the most expensive health insurance plans.

But labor leaders have grown wary that the Obama administration and Congress are scaling back their ambitions for healthcare reform despite the president's insistence that he has not. Losing union support for the healthcare effort would be a damaging blow. Organized labor has been one of the staunchest proponents of finishing the job on healthcare reform.

“It appears that the administration and Congress will be taking a much more modest approach to healthcare reform. The cost and value of such reform would not justify using an excise tax,” Larry Cohen, president of the Communications Workers of America, told The New York Times. The communications union has been among the most vocal labor organization in its opposition to the tax.

The excise tax is one of the toughest issues to resolve between the House and Senate bills. The Senate bill relies upon the tax as a major source of financing for its roughly $900 billion price tag. Moreover, Senate Democrats and the White House maintain that the tax not only raises money to pay for the healthcare bill but would be the most important cost-containment tool in the measure by discouraging people from buying expensive insurance and consuming large amounts of medical services. House Democrats and labor unions rejected the tax as a burden on middle-class workers, especially union members who negotiated generous tax-free fringe benefits in lieu of higher wages.

Prior to Sen. Scott Brown's (R-Mass.) victory in a special election last month, Obama and the Democratic leaders in Congress were on the verge of a deal to move the final healthcare bill. The Times cites opposition to the excise tax among Massachusetts voters as a reason for Brown's success, according to Massachusetts Democratic Reps. Edward Markey and Richard Neal.

Brown's win deprived the majority of the 60th vote it needed to overcome Republican filibusters, forcing Democrats to look to a new strategy that would require the House to pass the Senate bill, followed by advancing a second bill containing the compromises between the two chambers using budget reconciliation rules that would enable the measure to pass the Senate on a simple majority vote.

Grumbling from labor unions has not been limited lately to healthcare reform. Unions are also displeased with the lack of progress on other priorities, especially passing the Employee Free Choice Act, which would facilitate union organizing.

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