Unions struck a deal to exempt them from 'cadillac tax' funding health care reform? 

National Journal is reporting that the unions have struck a deal on health care reform:

Unions tentatively struck a deal Tuesday to exempt collectively bargained healthcare plans from a tax on high-cost plans expected to be used to help raise revenue for the healthcare overhaul.

AFL-CIO President Richard Trumka, Service Employees International Union President Andy Stern and United Auto Workers President Ron Gettelfinger met with House Speaker Pelosi Tuesday, a day after labor leaders met at the White House to express their opposition to the excise tax.

House and Senate Democratic leaders are to meet with President Obama this morning at the White House to discuss health care. House Ways and Means Chairman Charles Rangel said he hopes there could be an agreement on the excise tax as early as today after the White House meeting, but then conceded: "That's stretching the word `hope.' "

Exempting collectively bargained plans would appease unions that often offer expensive health plans in lieu of higher wages. The deal could also help Obama avoid breaking his promise not to tax those earning less than $200,000. Obama recently expressed a preference for the excise tax.

The excise tax could further be tweaked to ensure Obama's promise is kept for non-union workers as well.

The so called "cadillac tax" on expensive health plans is a major funding mechanism for health care. So if a huge percentage of people with expensive health care plans now become exempt from the tax, isn't this going to have a radical impact on the bill's finances and how it is being paid for? Won't the CBO have to re-score the whole thing? It's hard to imagine that exempting unions from the tax isn't going to make the bill much more expensive without some new mechanism to raise revenue.

It's also utterly bizarre that the Senate just passed health care reform without addressing this issue with the unions. Striking a deal now makes Democrats appear completely captive to union interests.

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Mark Hemingway

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