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Unions can live with revised 'Cadillac' tax on health insurance, says local labor leader

This article first appeared in the St. Louis Beacon, Jan. 19, 2010 - The prospect of taxing so-called "Cadillac" or expensive insurance plans did not sit well with state labor leaders, who saw their members taking the hit.

"For 20 years we've been getting less wage benefits to make sure our members get health care," says Hugh M. McVey, president of the Missouri AFL-CIO. "Now we were being told we would be taxed for those benefits."

But the proposal was significantly revised, and union leaders are willing apparently to live with the compromise. The bottom line now? Until 2018, health benefits for "people who fall under collective bargaining agreements will not be taxed," says McVey.

Initially, the Senate had proposed a tax on family plans exceeding $23,000 a year, and on individual plans costing more than $8,500. The new version, the AFL-CIO says, calls for taxes on family plans exceeding $24,000, and on individual plans costing more than $8,900.

Union leaders say the threshold would rise even higher if health-care costs are higher than projected between now and 2013, the year the tax on health benefits might take effect.

The changes in the proposed excise tax on "Cadillac" plans would reduce the amount of money raised from an estimated $150 billion over 10 years to $90 billion over the same amount of time.

Still, McVey says the changes would bring relief to millions of workers in Missouri and across the country.

"None of us in the AFL-CIO is particularly happy that we didn't get the public option," McVey says. "But this is the beginning of what we hope will be help -- not only for AFL-CIO workers but for all workers. This maybe will start us down the road toward coverage for all Americans."

McVey stressed that the fight is far from over, and he warned that this isn't about union workers alone but about several provisions that will affect all workers, whether they belong to a union or not.

For starters, McVey is opposed to any provisions that would count the cost of dental and vision care as part of the Cadillac plan.

"If a Cadillac plan means dental and eye care, then these should be part of any health plan as far as we're concerned. We held onto these (benefits) because we gave up wages."

Randy Kiser, senior field rep for the Missouri AFL-CIO, also supports a provision protecting plans that include a high percentage of women and elderly from being automatically taxed. 

Kiser adds that a higher threshold would put many of these groups beyond the reaches of the proposed excise tax.

McVey says consumers also would be protected by a provision to raise the threshold each year by the amount of the rise in the Consumer Price Index, plus 1 percent, as well a provision to raise the threshold to $27,000 for police, firefighters and others in high risk professions.

The Missouri Chamber of Commerce has consistently opposed the health-care bill at every stage, saying controversy over the Cadillac provisions was just a small part of why the bill is flawed and shouldn't become law. In particular, the business group says the proposal will raise the cost of health care rather than lower it.

Still, McVey says this is a bill organized labor can live with, and he praises President Barack Obama's efforts on health-care legislation.

"People are saying this (health reforms) is going to cost him is presidency," McVey says. "We're going to make sure it doesn't cost him. Other people have told us for years they're going to try to do it, and they did nothing. This guy (Obama) is doing it and for that we won't forget him."

While settling for the plan now on the table, McVey and other union leaders say there still is a lot more to be done in the future to make to make health care affordable and accessible to all working families.

Robert Joiner has carved a niche in providing informed reporting about a range of medical issues. He won a Dennis A. Hunt Journalism Award for the Beacon’s "Worlds Apart" series on health-care disparities. His journalism experience includes working at the St. Louis American and the St. Louis Post-Dispatch, where he was a beat reporter, wire editor, editorial writer, columnist, and member of the Washington bureau.

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