The excise tax on high-cost health care plans, often described as the
Cadillac tax, appears to be going forward. Democratic leaders and labor
union representatives, initially threatening to do Democrats political
damage over the proposed tax, have reached an agreement
Democrats, who lean heavily on unions, felt compelled to win their support and view doing so as a political
victory. But some health care watchers worry that too much was
sacrificed in concessions to labor leaders. Is the excise tax agreement
progress for health care reform or one compromise too many? At
particular issue is a detail that allows collective bargaining groups
-- such as unions -- a two year exemption from the tax.
- A Worthwhile Sacrifice Matthew Yglesias concedes
the deal is a sacrifice of health care for politics, but insists it's
worth it. "Obviously, the excise tax deal by which collectively
benefits get a special two-year exemption from the tax is a bit of a
grubby interest-group compromise," he writes. "So it is what it is. The
main point is that the long- and medium-term cost-control potential of
this move is 100 percent intact and the revenue needed to expand health
insurance coverage to millions of additional people will still be
That's an extraordinary achievement."
- 'Special Deal for Labor Unions' The Atlantic's Megan McArdle thinks the temporary concession will become permanent. "Presumably, the unions plan to go back and get their exclusion extended
every few years. Otherwise, the deal doesn't make much sense. The
ostensible reason for the respite is to allow them to renegotiate new
collective bargaining agreements, but in these inflationary times, how
many collective bargaining agreements last longer than three years?"
- Why The Concession Makes Sense The New Republic's Jonathan Cohn argues
that there's a legitimate policy reason to give unions two years. "The
argument for temporarily exempting union plans makes sense, at
least in principle. Many unions really did accept generous health
benefits, in lieu of wage increases, on the theory it was worth more to
their members." Think Progress chief Igor Volsky agrees, writing, "Critics will interpret the temporary exemption as a special interest
carve out for a vital political constituency, but it makes perfect
policy sense." Cohn notes that the change cuts $60 billion from the tax's revenues
over the first years, but he thinks that can be made up in other ways.
- Doesn't Really Change Much So says the Washington Post's Ezra Klein.
"[H]ere's the bottom line: The excise tax is virtually unchanged."
Klein reports that labor leaders are very happy with the compromise.
"And my hunch is that the administration is similarly pleased: They
managed to get the unions on board while leaving the long-term
structure of the tax almost unchanged."
- Big Step Towards Passing Health Care Washington Monthly's Steve Benen writes,
"After a slow start, the White House has its foot on the gas, steering
closer to a final health care reform bill that can pass both chambers."
Benen is optimistic but thinks the biggest hurdle could have nothing to
do with health care: If Martha Coakley loses the Massachusetts, it will
give Republicans 41 seats in the Senate, possible enough to block the
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