Last night, Obama administration officials, and the President himself, met with the most influential leaders in organized labor to brainstorm ways to fix to a controversial provision in congressional health care legislation, roundly opposed by unions. And it appears the White House is trying to hit the right notes to keep its fragile alliance with unions alive.
At issue is whether there’s any way to square the administration’s support for a tax on high-end health care plans–a major source of funds–with the concern, articulated by myriad progressives and union officials, that the tax will impact many middle class Americans, and ultimately ensnare more and more of them.
“My understanding it was really discussions surrounding policy fixes that could, to at least try to delay the impact and look at maybe raising the threshold a little more,” said one top labor official briefed on the meeting.
“Secretary Sebelius was there for part of the discussion,” the official went on. “They are exploring, at least, some modifications that might take into account some collectively bargained plans, maybe trying to tie some exclusion for plans that are covered by a collective bargaining agreement.”
Members of Congress have suggested that one way to square the circle is by applying the tax to only the most expensive of insurance policies, and by adjusting the index so that it doesn’t affect more middle class Americans as health care costs rise. The lost revenue could be replaced, sources say, by expanding the Medicare payroll tax to apply to the investment income of high-income Americans.
“If you just tie it to [the consumer price index] and not health care inflation…in just a few years you’d have a huge segment of our workers affected,” the official added.
Ostensibly, the White House’s goals are to address the unions’ concerns enough not to alienate them ahead of the 2010 elections, and to maintain their support for the greater package of reforms, all without sacrificing the tax itself, which is crucial to final passage in the Senate, and which congressional scorekeepers identify as a major cost saver.
Rep. Joe Courtney (D-CT)–who is leading the fight in the House against the tax says the President has shown some willingness to compromise.
“It’s clear the White House isn’t completely abandoning the excise tax,” Courtney told me today. “But I think they’re going to find that this is a square peg in a round hole. it’s hard to fashion an excise tax that’s truly aimed at the high end of America that really generates anything in terms of revenue.”
In the last two weeks, Courtney said, “I think this thing has moved in our direction.”
“I think the dynamic has shifted to the President signaling flexibility on the plan,” he added. Obviously the resistance in the House along with Labor’s getting very vocal.”
Unclear, though, is whether the White House is making unions any promises beyond the scope of health care in a bid to buy their silence over the tax.
“We are working hard to make the bill something that is worthy of being health care reform,” said AFL-CIO spokesman Eddie Vale, “and [we] want to negotiate and meet in private so we can get something done, not negotiate in public.”
Yesterday, AFL-CIO President Richard Trumka boldly predicted that Congress would pass far-reaching, but also politically difficult, labor legislation in the first part of this year–a sign, perhaps, that labor expects Obama to throw his weight behind workers’ chief priorities. But for now, nobody’s saying one way or another whether the White House is putting separate ideas out there.
Congressional Progressive Caucus co-chair Raul Grijalva (D-AZ) told me tinkering around the edges of the tax won’t be enough…unless perhaps the White House put other issues important to workers at the fore.
“If there was a trade that involved some other long term gains that benefit organized labor, hey, you look at it, but at this point, nobody’s brought that up,” he said.
