Labor unions lobby against ‘Cadillac’ tax

New ad campaigns and coordinated fly-in visits to Capitol Hill by union members this week will keep the pressure on Senate Democrats.

ADVERTISEMENT
Complaints from organized labor, one of the Democratic Party’s key constituencies, have grown louder in December as the Senate debates legislation that includes the excise tax, which will affect many union members’ insurance plans.

On Tuesday, four unions released a pair of studies that showed insurance companies that wish to avoid the proposed tax on so-called “Cadillac” coverage plans will be forced to cut healthcare benefits. One main finding of the reports was that the excise tax will hurt the Federal Employees Health Benefits Program, a common insurance program for unionized federal workers.

“What is at stake here, as my colleagues have pointed out, is that the plans our workers have negotiated over the past 30 years are now being termed Cadillac plans,” Larry Cohen, president of the Communications Workers of America (CWA), told reporters on a conference call Tuesday. “We need legislation that makes those that don’t pay, pay.”

Along with the CWA, the American Federation of Government Employees, the American Postal Workers Union and the National Association of Letter Carriers were behind the reports’ release studying the proposed excise tax’s effects.

Opponents of the tax say “Cadillac” insurance plans are only the first target.

“Ultimately, it is going to hit the Chevy plans that make up the bulk of insurance plans for government workers,” said Fred Rolando, president of the Letter Carriers union. “The bill, as currently drafted, will turn those Chevy plans into Yugo plans.”

Union leaders predicted that many of their members will see their insurance plans taxed when the measure first goes into effect in 2013 under the Senate version of the healthcare reform bill. And since the tax is not adjusted to the rising cost of healthcare insurance, more and more members will see their plans affected over the years.

Hearing labor’s concerns, Senate Majority Leader Harry Reid (D-Nev.) raised the original tax threshold in the Senate Finance Committee bill. In Reid’s legislation, portions of health insurance plans above $8,500 for an individual and $23,000 for a family will be taxed 40 percent, equaling close to $150 billion in government revenue over 10 years.

Those supportive of the excise tax have said it will help reduce healthcare costs by forcing insurance companies to trim their prices. That argument has won favor in the Obama administration, with Office of Management and Budget Director Peter Orszag saying the tax is a key measure to cut healthcare costs over the long run.

But the unions have rejected that argument and have lobbied furiously against the tax, upping the ante with a new ad campaign that started this past weekend.

The CWA released a series of online ads to run on Washington media and political websites, as well as Facebook, decrying the excise tax. Users are directed to sign a petition opposing the measure. The union is also running keyword ads on search engine sites like Google and Yahoo! and video ads on Hulu.

The CWA’s ad campaign is in concert with the efforts of its parent group, the AFL-CIO. The union federation-sponsored television ads focus on its opposition to the tax. The $1.5 million ad buy began running nationally Sunday, and localized versions of it will run in Delaware, Indiana and Virginia.

Further, 175 AFL-CIO members from across the country were expected to come to Washington on Tuesday and Wednesday this week to discuss healthcare reform with lawmakers, the largest fly-in visit organized by the union federation on the issue yet.

While not completely happy with the Senate healthcare bill, the labor movement is more pleased with the House effort so far. That bill has no excise tax, a stronger government-run insurance plan, known as the “public option,” and a more expansive employer mandate. If changes cannot be made to the Senate bill during the amendment process, union leaders expect to lobby for the House bill once the two chambers enter a conference.

“We will definitely be coming down on the side of the House bill,” said John Gage, president of the Government Employees union.

One key argument against the excise tax is that the measure goes against President Barack Obama’s campaign pledge not to tax anyone making less than $250,000 annually. Several Democrats echoed that promise last year during the run-up to the November elections.

“We made a promise to the American people that the middle class would not be affected by the pay-for,” said Rep. Gerry Connolly (D-Va.) on the reporters’ conference call with union leaders. “The Senate has gone into territory with their excise tax that most certainly will affect the middle class.”

Connolly also predicted that the House would win the battle over the proposed tax in the end, despite support for it among senators and the administration.

“Once we sit down in the conference, I can guarantee you that the excise tax as it is currently crafted in the Senate bill will not survive,” Connolly said. “A lot more of the House version is going to prevail than the Senate version.”