Unions Negotiate Exemption From Cadillac Tax
Various sources are reporting that after vociferous labor reaction against taxing “Cadillac health plans”, the White House and labor groups have apparently reached a deal whereby members of labor unions who would be affected by the tax will have a temporary exemption.
Under the terms of the proposed deal, the threshold for families would be raised to $24,000, and would exempt certain benefits like vision and dental, according to a Democratic source.
Collectively bargained plans would be exempted until 2017, to provide workers with a real opportunity to renegotiate their benefits packages, which were designed under current law and excluded from taxation.
Raising the exemption level and exempting vision and dental would probably help avoid impacting any of the relatively small number of middle-class families impacted by the tax, which is probably a good thing. However, there’s simply no excuse for the exemption for plans covered by collective bargaining agreements, even if its temporary. Especially since, as Megan McArdle notes, the temporary exemption will likely turn into a permanent one.
Now, before there’s too much anti-union grousing, it’s worth noting that CNN reports that the AFL-CIO was also pushing for a straight income-based exemption.
One of the sources familiar with negotiations said that in addition to protecting health plans negotiated under collective bargain agreements, labor leaders are pushing to expand the deal to exempt health plans for all Americans making under $200,000 a year.
If that’s true, kudos to the union for pushing for that.
The bottom line, though, is that if the Administration wanted to mollify labor, then they should have implemented the income exemption and dumped the union exemption. Doing it the other way around, as they appear to have done, is interest-group politics at its absolute worst.