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 bargaining health 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 raised. 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 legislation.