Labor scores victory on excise tax in Obama's health plan

Organized labor groups scored a victory Monday in President Barack Obama's healthcare bill.

Obama, in his health bill unveiled Monday, softened the impact of the tax on high-value insurance plans (the so-called "Cadillac tax") that was contained in the Senate's initial legislation. 

The president's proposal calls for delaying implementation of the tax to 2018 from 2013, and raises the thresholds at which insurance plans can be taxed.

The excise tax won't kick in for families until plans hit $27,500 in value. That's a higher ceiling than the $23,000 threshold called for by the Senate. 

The threshold is still much higher, too, than a change to the excise tax that had been negotiated by labor groups and House and Senate Democrats in January, before Democrats lost their filibuster-proof majority in the Senate. That deal called for the excise tax to not kick in until a health plan reaches $24,000 in value for families.

The Obama plan gives labor groups more leeway than what they had been able to negotiate in January, when they had been previously excoriating Senate Democratic leaders for including the tax, which unions said would disproportionately impact their members.

One labor official noted that the Obama plan, though, will be good for all workers, since the delay in implementation of the tax affects all workers. The official argued the change was an example of unions benefit workers beyond their members.

Additionally, the new point at which the excise tax would kick in is indexed to rise each year at the rate of inflation plus one percent, with additional tools available to up that threshold further if health costs rise higher than expected.