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Business, labor unite to end O-Care tax

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Business and labor are uniting behind legislation that will repeal one of ObamaCare's much-maligned taxes.

A bill introduced by Reps. Pat Tiberi (R-Ohio) and Dan Lipinski (D-Ill.) would end the Affordable Care Act's (ACA) reinsurance fee. The reinsurance program will tax health plans from 2014 to 2016 and use the funds to help stabilize the individual market as sick patients come on board.   

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The legislation has attracted support from several business groups and unions that have lobbied to end the fee, saying it taxes their plans but provides no benefits to their members. 

“There should be a reevaluation of this fee and others in the law. If there is going to be fewer people in the exchanges, why do we all need this money? We are talking about billions of dollars,” Maria Ghazal, vice president and counsel for the Business Roundtable, told The Hill. “We should take a pause here, especially for the reinsurance fee, and figure out what to do next.”

The reinsurance fee will generate about $25 billion in revenue over three years. In 2014, the program will charge health plans $63 per person on each plan — the plan’s holder along with his or her spouse and children if they’re on that plan — leading to its moniker: the “belly button tax.” 

“Imposing a $63 dollar ‘belly button tax’ in 2014 alone, as a means of subsidizing for-profit insurance corporations, could put our non-profit plans out of business. With many of these tax provisions set to take effect next year, we call on members in both parties to support this legislation,” said David Mallino, legislative director for the Laborers’ International Union of North America (LIUNA).

The Business Roundtable and others in business — such as the International Franchise Association (IFA), the National Association of Manufacturers and the National Retail Federation — are backing the Tiberi-Lipinski bill. Unions like LIUNA, the International Union of Operating Engineers (IUOE), Unite Here and the International Association of Machinists (IAM) support the bill as well.

In an interview with The Hill, Tiberi said his legislation would not treat business and union health plans differently.

“My bill would actually treat everybody the same, which is the right and fair way to do it and not pick and choose winners and losers like so many people in this place [Washington] want to do,” Tiberi said.  

Business groups will have to make headway with Republicans on Capitol Hill to end the reinsurance tax. Stopping the fee will be difficult for the GOP as it has been tagged as a gift to the Democrats' political allies in labor, though large employers stand to benefit from the change as well.

“It's not what they have been calling it on the Hill, which is a union bailout. It effects everyone who has employer-sponsored coverage,” said Jay Perron, IFA’s vice president of government affairs and public policy.

“We are going to have to spend some time educating members. I think once they hear from small business owners that this won't affect just one segment of the economy, that will help.”

The nation’s largest labor federation, the AFL-CIO, has yet to take a position on the Tiberi-Lipinski bill. An AFL-CIO official told The Hill that the federation is still reviewing the legislation but criticized the reinsurance fee nonetheless.

“The $63 fee is a premium for this reinsurance program but the premium is being charged to plans that don't participate in the program,” said the AFL-CIO official.

The AFL-CIO passed a resolution at its convention this September that took aim at the ACA, grabbing the White House’s attention. Part of that resolution called for the elimination of the reinsurance fee and other taxes that could hurt union health plans.

"There can be no policy justification for imposition of this tax on the individuals who receive their health care from multi-employer plans," said James Callahan, IUOE's president, in a statement. 

The onus will be on business groups to win those GOP votes for ending the reinsurance fee and combat its image as a giveaway to labor, according to union officials.

“The business groups need to educate the Republican caucus that it is just not the case. I think Mr. Tiberi and the Corporate Health Care Coalition are trying to do just that,” said Ron Kloos, national vice president and legislative director for the Transportation Communications Union/IAM.

The Corporate Health Care Coalition backs the Tiberi-Lipinski bill and is made up of several of America’s biggest companies, including Boeing, Caterpillar and Intel. The group is housed at Fierce, Isakowitz & Blalock, one of the city’s prominent Republican-leaning lobbying firms.

The healthcare reform law has been a divisive issue in Washington and any fix to the act ignites an uproar from either ObamaCare’s critics or supporters. The proposal to delay the reinsurance tax as part of last month’s deal to reopen the government, which was later jettisoned, was no different.

“This was part of that one deal that got bounced over here and kind of just swarmed out of control that this was a giveaway to the unions,” said Tiberi, who is working to correct that impression among his GOP colleagues.

“The majority, according to [the Congressional Budget Office], of plans that are impacted are business plans that aren’t even union companies.”

K Street will have to work the GOP caucus too to gain support for ending the reinsurance fee.

“We will try to rally the business community in support of this bill. It's a little bit of an uphill battle and just because, yes, they [unions] would benefit too, I hope people don't lose sight of the broader employer-based coverage that will be impacted by this,” said a Republican lobbyist who supports ending the reinsurance fee.

The Obama administration has shown some give on the issue. The Health and Human Services Department proposed regulations late last month that could exempt self-administered health plans from the reinsurance fee in 2015 and 2016, though not 2014.

But both business groups and unions said the impact of the those new rules would be limited for their members.

“We do not know of any companies in the Business Roundtable who would benefit from this possible exemption from the reinsurance fee,” Ghazal said. “There's not many companies that do self-administered plans anymore. … It doesn't help us. That's the bottom line.”

The path forward for the bill may be to hitch a ride on must-pass legislation. Along with a delay of the reinsurance fee, a repeal of the medical device tax was almost attached to the budget deal last month that ended the government shutdown.

“We are really trying to buy a ticket on a composite bill down the road. We hope all these issues can be addressed … all these specific pay-for taxes that will be passed onto the healthcare consumer,” said Neil Trautwein, a vice president with the National Retail Federation.

“If it costs too much, people won't buy it. That's a lesson we as retailers know well.”