Union Allies in House Skeptical of Financing in Senate Health Care Bill

Posted December 26, 2009 at 5:00am

Union-aligned Democratic House Members criticized President Barack Obama this week for endorsing a Senate health care provision that would tax “Cadillac— insurance plans, claiming that it is a breach of campaign promises Obama made when he was the 2008 Democratic presidential nominee.

“I don’t know who got to the president and said this makes sense,— Rep. Phil Hare (D-Ill.) said earlier this week. “It makes no sense.—

Along with a public insurance option and abortion-related proposals, Democratic negotiators from the House and Senate must mend deep internal divisions in figuring out how pay for health care coverage for 30 million uninsured Americans. To offset the tab, Senate Democrats proposed a steep levy on high-cost insurance plans, while the House bill includes a tax on wealthy wage earners.

Rep. Joe Courtney (D-Conn.) shares Hare’s frustrations with the White House over the proposed tax, which is expected to disproportionately affect expensive union insurance plans. Both lawmakers also agreed that the White House continues to be disingenuous with union officials about the political realities of pushing through a compromise health care bill without some tax on high-cost insurance plans.

“There’s been a change,— Courtney said. “This is a far cry from the message in the fall of ‘08.—

In the runup to the presidential election, Obama was a frequent critic of a similar tax endorsed by the GOP nominee, Sen. John McCain (Ariz.). In October 2008, Obama’s campaign bought national television ads to criticize McCain for his proposal.

“McCain would tax health benefits … for the first time ever, meaning higher income taxes for millions,— a narrator said in an ad run by Obama’s campaign. “His plan would raise costs for employers offering health care, so your coverage could be reduced.—

In the 2008 elections, Courtney said the Senate’s proposed tax “was not some obscure issue for the voters.—

According to a union official, the administration’s apparent about-face reflects the competing approaches of White House economists, including Office of Management and Budget Director Peter Orszag and Obama’s political advisers. The fear among political types is that union households and other middle-class wage earners will turn their backs on Democrats at any suggestion that the majority-backed health care overhaul was paid for with their tax dollars.

“There’s split thinking within the White House staff between the economists … [and] others on the White House staff that understand that this is a political problem,— the union source said.

Hare and Courtney’s sentiments appear to be gaining steam with their House colleagues. The lawmakers are two of 190 House Members who have signed on to a letter encouraging Speaker Nancy Pelosi (D-Calif.) “to reject imposing an excise tax on so-called high cost insurance plans.— But Sen. Ben Nelson (D-Neb.), whose 11th-hour support pushed the Senate bill across the finish line, has pledged recently not to vote for a final bill that includes the House’s tax proposal.

The White House has been slow to listen to the concerns of labor leaders, Democratic Members and their allies, Hare said.

“We’ve asked — and at some point we’re hoping — we will be able to have a meeting at the White House with whoever, whether it’s the president or whoever else we can get,— he said.

Despite their gripes, both lawmakers stopped short of promising a “no— vote on a final health care bill that includes a tax on high-cost insurance plans. They agreed that any tax on plans could become a political problem, but suggested that they could get beyond a deal that would offset the excise tax with a cap on nonprofit deductions and other obscure revenue raisers.

“I’m not of the school to pull the pin on the grenade to blow everybody up to get your way,— said Courtney, adding that “the politics of it for a party that in ‘08 campaigned against changing the tax status of health plans is extremely treacherous.—

In the previous election cycle, Hare and Courtney both raised more than $230,000 from union-sponsored political action committees, according to CQ MoneyLine. Hare, a former factory worker and top aide to his predecessor, former Rep. Lane Evans (D-Ill.), in particular has long been aligned with the labor movement.

While Courtney left the door open, Hare appears less willing to compromise on the tax.

“There are some things I’m willing to bend on and I’ve flexible, but when you want to pay for this thing on the backs of ordinary people and their health care plans, that’s a recipe for a no vote from me,— Hare said earlier this week. “I can’t envision a bill that would tax employee health care benefits.—

Labor unions this week also appeared disinclined to cut a deal on the proposed excise tax. A union official acknowledged privately that torpedoing the proposed tax on Cadillac plans is lobbying issue No. 1 in the upcoming negotiations.

“The public option is the toughest to resurrect in conference, but not impossible,— the official said. “In financing, there’s a lot of room to fix what we think is wrong.—