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  • Another Special Interest Gets Sweetheart Deal in Health Care Bill

    After a long-week of negotiations, unions have won an exemption from the excise tax on high-cost “Cadillac” health insurance plans. The excise tax would fall on health insurance plans that cost more than $8,500 for individuals and $23,00 for families (the union deal reportedly slightly increases these thresholds) starting in 2013. It is one of the many tax hikes proposed by Congress to partially offset the cost of its take over of the health care system.

    Under the terms of the deal cut between Congressional negotiators, union leadership and the White House, union members would not have to pay the tax until 2018 – although this could be extended in the future and further delay union members from paying the tax. This latest deal for a special interest further demonstrates that the push for health care reform has always been about politics – not the best policy for the American people.

    If it had been about setting the right policy, Congress would have capped the unlimited income tax exclusion for employer-provided health insurance. A cap would have been the right decision from both a health care and tax policy perspective, but President Obama assailed it during the campaign. The excise tax is an inferior, roundabout way of capping the exclusion without explicitly doing so.

    Excluding union members from the excise tax is grossly unfair for non-union workers left paying it. For instance, two workers at the same company, one in the union and one not, that have identical health insurance plans would end up paying significantly different amounts of tax. The tax is 40 percent on the value of health plans in excess of the levels described above. The union worker would not pay this hefty tax, but the non-unionized worker would. There is no policy justification for exempting the union worker. They would get the exemption because they have powerful representation in Washington. Non-unionized workers would pay it because they don’t.

    The tax code is already monstrously complex and the union carve-out from the tax will only make it worse. Tax authorities, taxpayers and employers will need to determine which workers are subject to the tax and which get a free pass based on union membership. They will also have to strip out the portions of the plans that cover dental and vision benefits since the new deal exempts them from the tax. This will add a new set of complicated paperwork for everyone to deal with.

    Their exclusion from the tax means that Congress will need to find additional revenue to replace the revenue the tax would have raise had it applied to union members. This most likely means a further increase of the payroll tax, and applying it to investment income for the first time, for taxpayers earning more than $250,000 a year. This tax increase will hurt those that earn much less by lowering investment. Lower investment will mean businesses will create fewer jobs and wages will be lower for workers.

    The backroom deal to exempt unions from the excise tax is a bad deal for any taxpayer that is not in a union. And not only will union members not have to pay the tax, but unions will get an extra benefit because they will have a new selling point to pitch potential members and help swell their ranks: join the union – get a tax cut.

    This latest backroom, sweetheart deal for a special interest should anger all taxpayers. Even if they aren’t impacted by this particular deal, unless they have powerful friends at the negotiating table, they could be on the chopping block next. Business as usual in Washington.

    Posted in Obamacare [slideshow_deploy]

    20 Responses to Another Special Interest Gets Sweetheart Deal in Health Care Bill

    1. Ozzy6900, CT says:

      This "deal" struck between unions and the Obama Administration is nothing less than corruption at its worst. How is it possible that those who swore to uphold the Constitution are allowed to blatantly make special deals that allow one set of people pay tax and another set get away with not paying. The Constitution states that when a tax is levied, it is to be levied EQUALLY. As a union worker, I am ashamed of the people I pay that are supposed to be the "example of equality" (said with tongue in cheek). If I am able to, I will try to find a way to have my union dues impounded or escrowed so that they will not be able to use my money to fund their future corruption.

    2. Bobbie Jay says:

      The Majority of American government runs and acts on distinct: discrimination, bias, favoritism, bribes, coercion, manipulation, ignorance and STUPIDITY! ALL WITH TAX PAYER MONEY!!!! what a legacy…

    3. Dave, Fairfax, VA says:

      I cannot understand where the Constitutionalists are on this issue. This is a clear violation of the 14th Amendment, equal protection under the law. Two individuals working for the same company, both citizens of the United States,making the same amount of money, with the same exact health care coverage; one pays a tax and the other does not solely based on the premise that one chose to join the union and the other did not. This is a blatent violation of the Constitutional rights of the non-union worker. I hope there are those out there willing to drag this to court. The White House and the Democratic leadership in Congress must be held accountable.

    4. AppyConservative, TN says:

      Isn't it interesting that nearly everyone in the WH and in the media misread 2008. People weren't voting for a banana republic. They weren't voting to become a stagnant Socialistic European country. They were voting for another kind of change. Voters believed what Obama said about changing the tone in Washington, about transparency, bipartisanship and accountability. They voted for a guy who seemed genuinely concerned about the deficit. Someone who offered hope — who would bring people together around the table to solve our problems.

      What we got was a man who evidences all the worst characteristics of all our worst Presidents. We have a Congress that refuses to listen. America cried out all summer in the town halls, "STOP THE GAMES. Enough with the BS. This is not what we voted for."

      The American people deserve a better. We've had it with the bribes, the payoffs, the late night votes and the backroom deals. These so-called representatives think we have no business in their business. But they work for us. We have the right to know what they're doing to us.

      I say we need an Open Meetings Amendment to the Constitution. http://appalachianconservative.blogspot.com/2010/

    5. Dr. Ben Slack says:

      al capoon would be embarrassed by the lawless corruption from the chicago thugs running the white house today….what is going in washington with all the backdoor deals and behind the scene corruption and bribes that is taking place would make him like look a kid stealing peace of candy at the drug store…i had hoped that some moderate democrates would step up to the plate and join with the republicans and stop this health care madness, but it appears there are no level headed democrates left in the senate…saddens my heart…evan bye what happened to all that sanity you spoke of on the networks….

      karl marx would love to see this one act play taking place…he would have thought he wrote it…

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    7. David Sweitzer, Sono says:

      We may be falling for a trap set up by Obama and his Health Plan Stratergy. Most Americans are outraged learning of the speical deals being given to some states and now the unions to get the Health Care package passed. Since it seems so patently unfair it must just be a pretense.

      Let's assume that there is a dead lock in trying to get the bill through the House and Sentate conference committee now. In rides President Obama, who says he will not sign any Health bill that gives any state or group special rights, monies or benefits over states of the general public. He becomes a hero, the democrats quickly gets the bill to his desk without speical deals and we end up with the socialistic health care plan. He wins, the democrats save face, yet win, and we end up holding the bag. Obama does not give a rats tail for Nebraska or any of the states getting special benefits if he can utilimately get his health plan into law. The special deals may just be a calculated ruse by Obama.

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    9. Dana, Arizona says:

      I wonder how I am suppose to pay for this so called Health care. My hourly wage was cut by 50 cents an hour and, I lose 50% of my clients at the end of this month. I barely make $1300.00 a month, yet my house bills have all gone up by 5-10%. How am I going to pay a health care premeium? I don't think these people know how to live paycheck to paycheck and, chose either food or the electric bill. Did they really give themselfs a raise this year when everyone else got theirs cut? Yes Virginia, there really are Poor People out here.


    10. Bobbie Jay says:

      We do Dana. Hang in there. The ugliness will be exposed by the uglies themselves.

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