Unions win concessions but fight on

Organized labor is flexing its muscle in Senate negotiations over healthcare reform and winning important concessions from Senate Majority Leader Harry Reid (D-Nev.).

Reid has not given labor unions everything. But he has done enough to keep them from turning completely against the bill: including a version of the government-run health insurance program; raising the taxable level on high-cost insurance plans; and increasing the penalty for those companies that fail to provide health insurance to employees.

Keeping labor unions, a reliable Democratic-base group, on his side is an important accomplishment for Reid as he heads into a multi-week floor debate on the party’s biggest legislative priority. If unions were provoked to oppose the bill’s central provisions, it could tear apart the Senate Democratic Conference, pitting liberals against centrists.

Labor unions have put heavy pressure on Reid and other Senate Democrats to move away from the more centrist Senate Finance Committee bill and move closer to legislation approved by the Senate Health, Education, Labor and Pensions (HELP) Committee.

The AFL-CIO, which has 11.5 million members, has delivered 42,000 handwritten letters to Capitol Hill and dispatched labor representatives from 27 states to hold 100 meetings with lawmakers.

Unions have taken out print ads in newspapers criticizing Finance’s proposal as “deeply flawed.”

And on Monday, AFL-CIO President Richard Trumka held a news conference to reiterate union concerns, to remind people that labor is paying close attention and to “make sure we’re in the middle of that debate.”

One issue where they are watching closely is the contentious matter of paying for a portion of the Senate bill by taxing high-cost, or “Cadillac,” insurance plans. Union workers, particularly those in dangerous lines of work, negotiate for these plans, sometimes instead of more pay.

Legislation approved by the Finance Committee would impose the excise tax on family healthcare plans costing more than $21,000, a key component that the Congressional Budget Office (CBO) estimates would raise $201 billion for reform.

In a move likely to mollify unions, Reid has increased the threshold for high-cost insurance plans that would be subject to a 40 percent tax to $23,000, according to a source familiar with the legislation. The taxable threshold would increase each year by the rate of the Consumer Price Index plus 1 percent.

But while unions would prefer the tax be excluded altogether, Reid defended it Monday at a news conference.

“This bill is for middle-class families,” he said. “[President] Barack Obama, when we were involved in this healthcare, in the initial stages, in a telephonic conference call we had — one of the things that President Obama said is we have to make sure when we’ve finished this legislation it is not legislation that’s only for the poor people; it’s for the American middle class.

“And that’s where I’ve legislated since then, and that’s what this bill does,” he said.

Obama administration officials have also defended the tax proposal.

Trumka said he prefers the House bill, which does not raise money by taxing employee plans, but instead taxes wealthy earners.

He called for employers to bear a greater portion of healthcare costs, instead of going after employee plans.

“We think the excise tax as currently structured is a bad type of policy,” he said. “It puts the burden on the middle class while the rich and employers and others, that should be paying their fair share, skate,” he said.

Even though labor officials have blasted the proposal to tax high-cost plans, they have been careful not to criticize Reid and have even praised him for addressing their concerns.

“Sen. Reid is working hard to lessen the impact of this tax and we appreciate his hard work on this,” said Trumka.

Reid also announced Monday that he would include a government-run insurance program in the bill. Union officials are not completely happy with the details of the proposal because it would let individual states opt out of the public option. But they are satisfied enough to say that Reid is moving in the right direction.

Reid has also increased the penalty for employers who fail to provide health insurance for their employees. The Senate Finance Committee’s bill requires companies with more than 50 employees to pay the full cost of the federal health subsidy for each employee or $400 a person. Reid has raised that fee to more than $700, putting it more in line with the penalty adopted by the more liberal HELP Committee, according to the source.

While the concessions made the bill more palatable to unions, they didn’t stop Trumka from attacking the provisions hours before Reid’s news conference.

“The problem is that when you fail to force insurance companies to be competitive, and when you fail to make all employers pay their fair share, then you have to come up with more money somewhere — and that’s why you’re seeing proposals for a tax on working Americans’ health benefits,” Trumka said.

“It’s bad policy and bad politics, and it is totally unacceptable to put the cost of healthcare reform on the backs of working America,” he said.

The House bill would fund much of its reform package by imposing a surtax on families earning more than $350,000 a year.

Trumka gave Speaker Nancy Pelosi (D-Calif.) a heartier endorsement for “doing a great job of crafting legislation that doesn’t finance healthcare by taxing working families.”

But others praised the move to tax the high-cost plans.

During a speech Monday, Christina Romer, chairwoman of the Council of Economic Advisers, said: “A policy along these lines, designed carefully, will encourage both employers and employees to be more watchful healthcare consumers.

“It will discourage insurance companies from offering high-priced plans that would otherwise eat up larger and larger shares of workers’ wages,” she said.

Mike Lux, a Democratic strategist, said that Trumka and other labor officials are already trying to influence the balance of power in healthcare negotiations between the House and Senate.

“Trumka is trying to set things up for the conference committee,” said Lux, when asked about the timing of the news conference. “Hopefully it would have a pretty big impact. Labor is still an important part of the Democratic Party.”

Jeffrey Young contributed to this article.