Irate Labor Leaders Press Obama on Proposed Health Care ‘Cadillac’ Tax

The president of the AFL-CIO, Richard Trumka, said there was a frank discussion at the nearly two-hour White House meeting with about a dozen heads of the country’s biggest labor unions.

Major Garrett
January 12, 2010

WASHINGTON – President Obama told labor leaders in a tense two-hour closed door tussle over whether to tax health care benefits that he backed the tax, which labor leaders vehemently oppose, but also supports efforts “to protect working men and women.”

Their problem? Labor leaders say you can’t have it both ways. Some now openly accuse Obama of doing that and violating one of his most important early promises in the health care debate: that if you like the coverage you have, you will be able to keep it.

Obama did not attend all of the meeting held in the Roosevelt Room, but, according to an official who spoke on the condition of anonymity “reiterated his support for the excise tax but also reiterated his commitment to protect working men and women.”

Obama’s top health care adviser, Nancy-Ann DeParle led the meeting in the president’s absence, the White House said.

The “excise tax” refers to the Senate attempt to slap a 40 percent levy health insurance benefit plans valued at $8,500 for individuals and $23,000 for families (for high-risk occupations like law enforcement and firefighting the levels are $9,850 and $26,000).

Some have dubbed these plans “Cadillac” coverage because of their generous array of benefits. Labor leaders say the better moniker is “Chevy” because, they say, the tax would also hit union and non-union families. The tax applies to the accumulated value of standard health insurance, secondary plans that cover dental and vision expenses and flexible spending accounts.

But labor leaders, led today publicly by AFL-CIO President Richard Trumka, call the Senate tax an assault on middle-class familes and a sop to American “elites.” Trumka and other union leaders favor the House-passed 5.4 percent surtax on individuals making more than $500,000 and couples who earn more than $1 million.

“The senate bill instead drives a wedge between the middle class and the poor,” Trumka said in a speech at the National Press Club just hours before the White House showdown. ” The senate bill taxes the middle class by taxing workers health plans. The Senate bill pits working Americans who need health care for their families against working Americans trying to keep health care for their families. Now this is a policy designed to benefit elites.”

Significantly, Trumka did not threaten to torpedo health care reform if the Senate excise tax survives intense negotiations with House Democrats over a final bill.

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