Unions: No tax on 'Cadillac' health plans

Organized labor is turning to House Democrats to oppose a tax on high-cost insurance plans that is under consideration to help pay for healthcare reform.

Unions are blasting the idea in the Senate Finance Committee bill, as many union members would be affected because they either have expensive insurance to cover dangerous professions or negotiated for better benefits instead of higher wages.

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So far, at least one union has now turned to the lower chamber to stop the proposed tax from becoming law. An e-mail accidentally sent to The Hill on Wednesday by a senior lobbyist of the International Union of Painters and Allied Trades (IUPAT), an AFL-CIO member, encouraged congressional aides to have their lawmakers to sign on to a “Dear Colleague” letter from Rep. Joe Courtney (D-Conn.) to Speaker Nancy Pelosi (D-Calif.), saying the proposal would be an unfair tax on its members.

“The proposal that is going through the Senate Finance Committee is a direct tax on the members of the IUPAT,” said Chris Sloan, international legislative representative for the union, in the e-mail. “Our members work in dangerous high-risk professions for long hours, and health insurance companies use an individual’s profession in determining premium rates, making our plans more expensive.”

Under the Senate Finance plan, a 40 percent tax would be levied on portions of health insurance plans above $8,000 for an individual and $21,000 for a family plan.

The plan would generate more than $200 billion in revenue over 10 years, according to the Joint Committee on Taxation (JCT). Sen. John Kerry (D-Mass.) considered offering an amendment during the committee’s markup to scale the proposal back, but eventually withdrew it. He is expected to offer the amendment on the Senate floor.

Courtney’s letter argues to Pelosi that much of the American middle class may see its taxes go up under the proposal. In turn, it asks the Speaker to reject the excise tax proposal outright.

“We strongly encourage you to reject imposing an excise tax on so-called high-cost insurance plans. Such a tax would impact regions with high healthcare costs in the short term, and, in the long term, inevitably extend to more and more middle-income Americans across the country,” Courtney’s letter read.

More than 60 Democratic members had signed on to the letter by press time, according to an aide to Courtney. With union support, the opposition to the proposal could grow in the House and potentially derail a healthcare reform bill.

Courtney hopes his letter serves as a signal to the Democratic leader that the proposal is a non-starter in the House.

“It is a fool’s errand that you think you can have a sweet spot where you can find a cost or a plan to tax,” Courtney told The Hill. “I hope this letter will tell the White House and leadership in the House and the Senate that they will avoid this as an option.”

Union members are not the only ones who should worry about the proposal, Courtney said. The cost of healthcare plans will continue to rise over the next decade. Estimates by the JCT have more than a quarter of all family and individual healthcare plans by 2015 falling under the tax.

Pelosi said last week that the House might consider the Senate Finance excise tax proposal in order to help pay for reform. Courtney has talked with Pelosi and believes he can win her over.

“I think she understands the issue. Coming from another high-cost state like California, I think the numbers that are being thrown around in the Senate would trouble her, too,” Courtney said.

The House member believes the proposal has gotten so far because leading Democrats believe they can snag GOP votes for the reform package with it included.

While Sen. John McCain (R-Ariz) backed the excise tax during his presidential campaign, Courtney said the measure is unlikely to earn any support from those across the aisle.

“The White House’s flirtation with this is probably the belief that it might pick up some votes, including Republicans. I don’t think we are in that kind of climate anymore,” Courtney said.

Members have until noon Friday to sign on to Courtney’s letter. Then the lawmaker will pass it onto Pelosi.