Sen. Reid faces more pressure from unions on healthcare reform

Senate Majority Leader Harry Reid (D-Nev.) will face more pressure from the left on his healthcare reform bill as unions still have a number of grievances with the legislation.

Reid has struggled to keep the more centrist members of the Democratic caucus in line during the healthcare debate. But the Senate leader will also have to improve the reform package in order to meet the specifications of the labor movement, a key Democratic constituency.

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According to union officials, the bill’s employer mandate needs to be expanded to include all employers. Further, they are lobbying for the elimination of an excise tax on high-cost insurance plans, known as “Cadillac” plans. Finally, labor’s support of a robust government-run insurance plan, the “public option,” puts the Senate leader in tough spot considering centrist senators either want to jettison the plan or find a weaker compromise before voting for the bill.

Reid also faces a tough reelection campaign next year and Las Vegas is home to many union workers.

Unions are happier with the House version of healthcare reform, which has no excise tax and a stronger public option. While planning to lobby for amendments to make the Senate legislation better, several union officials said they will wait to the conference between the two chambers to push for the biggest legislative changes.

“We think the House bill is much stronger and supports our goals much more than the Senate version,” said Louise Novotny, director of research for Communication Workers of America. “It would have responsibility for all employers and require the wealthy to pay their fair share too.”

The excise tax could be the most troublesome for Reid. Union leaders have termed it a tax on the middle class since many labor groups will see some of their members affected by it. In addition, labor-friendly lawmakers have said it would break President Barack Obama’s campaign pledge to not tax those making less than $250,000 annually.

“We are very troubled by the excise tax. We think it is simply bad policy and bad politics,” said Harold Schaitberger, president of the International Association of Fire Fighters, an AFL-CIO member.

Others unions outside of the AFL-CIO are as opposed to the tax.

“The real risk is that this will impact middle-income workers the most who have been crushed by the economy. They don’t need an additional burden,” said Lori Lodes, a spokeswoman for the Service Employees International Union.

In a statement after Reid won a crucial Senate vote to begin debate on healthcare legislation, AFL-CIO President Richard Trumka applauded the Senate leader for his hard work on the bill but still said senators “have a ways to go.”

“Any plan to tax working families' benefits should be eliminated — taxes on the middle class are the wrong way to pay for healthcare,” Trumka said.

Reid has heard those complaints from the labor movement and has raised the threshold for what insurance plans will be taxed. In his bill, a 40 percent tax would be levied on portions of health insurance plans above $8,500 for an individual and $23,000 for a family plan, bringing close to $150 billion in revenue over ten years.

That change means fewer plans are affected by the tax than under the Senate Finance Committee version of the bill. In the Finance version, the tax was on individual plans worth more than $8,000 and family plans worth more than $21,000. That would have generated more than $200 billion in revenue over ten years.

In October, twenty-seven unions signed onto a newspaper ad taking issue with the Finance bill. One labor leader said, however, they would not take a similar tack for now.

“We don’t see the need at this stage to overly press the PR effort. This is pretty much inside baseball,” Schaitberger said.

Instead, unions will likely flex their lobbying muscle on Capitol Hill and get behind amendments offered to the healthcare reform bill by senators allied with the labor movement. Union officials pointed to a measure being worked on by Sen. Debbie Stabenow (D-Mich.) that would raise the ceiling further on what insurance plans would fall under the excise tax.

“We would very much be in support of anything that raises the bar higher during the legislative process before this heads to conference,” said one union official. “From a strategic standpoint, that then becomes the floor.”

An aide to Stabenow confirmed that the Michigan senator is working on an amendment to raise the excise tax’s threshold. She has not fleshed out the details of how much higher her amendment will raise the tax’s threshold.

Many union members could be affected by the excise tax. Some have expensive insurance to cover dangerous professions or have negotiated for better benefits instead of higher wages.

The excise tax has powerful supporters outside of the Senate though. Office of Management and Budget Director Peter Orszag has argued the tax will help contain healthcare costs by encouraging insurance companies to make their plans more efficient and thus lower their prices. The labor movement has rejected that argument, saying it will also lead to the insurance industry reducing benefits they are offering.

House Democrats have seemingly sided with labor in the debate. Speaker Nancy Pelosi (D-Calif.) did not include the excise tax in the bill that passed her chamber after 177 House Democrats signed a letter asking her to reject the tax.

Despite the Senate favoring the excise tax, union officials have not left the negotiating table in outright opposition and want to work with Democrats to improve the legislation.

“I am not going to ever draw any line with opposing an overall bill with so many steps in the process left,” Schaitberger said. “We are going to keep an eye on the ball to make the bill better.”

Others in the labor movement agreed with Schaitberger’s approach.

“We don’t like where the Senate bill is but we don’t want to reject it out of hand,” Novotny said. “At the end of the day, we want to say ‘yes’ to healthcare reform but the details really matter.”