Washington

The Congressional healthcare legislative process has come down to a few remaining and highly controversial issues. Lawmakers are returning to Washington to commence an effort to combine the separate House of Representatives and Senate health care reform bills. If the two bills can be merged – and then sent back to be passed one last time by each body – only then will the reform legislation go to President Obama for his signature.

The House and Senate bills contain some overlap and similarities, but there is a wide gulf between the two in key respects. Given the high hopes for sweeping reform of just one year ago – and in view of the obvious need to fix the badly broken and overpriced health care “system” – the House bill is largely uninspiring, but with a few merits as well as some major shortcomings. Among the merits are the significant provisions to subsidize the uninsured; a new tax to force the super-rich to pay a small surtax to fund the program; reining in some of the illegal practices of the health insurance industry; and creation of a skeletal form of “public option” to institute some real competition with the insurance companies. Problematic areas are the lack of credible cost controls, the fact that it forces workers to buy insurance, does not take effect for three full years, and provides an inadequate penalty on employers who do not provide coverage to their employees, among others.

The Senate bill, as passed on December 24, is significantly worse in many respects than its House counterpart. There is no public option whatsoever; workers are forced to buy private insurance with lower subsidies that the House bill provides; there is no tax on the super-rich to help fund the plan; and the penalties on employers for not providing health insurance coverage are so minuscule as to actually invite companies to eliminate health insurance for their workers. And on top of all this, the Senate proposal would, for the first time, levy a 40 percent excise tax on the value of health insurance plans whose premiums are above a certain level, which are misleadingly being called “Cadillac” plans.

Just how would this scheme work? As presented by the final Senate reform plan, those who receive health plan benefits valued at greater than $8,500 per year for an individual and $23,000 per year for a family plan (slightly higher amounts for certain “dangerous” occupations) would find the plan sponsor – the employer in most cases – forced to pay a tax equal to 40 percent of the plan value above these thresholds. The tax is not indexed to the rate of healthcare inflation. With the astronomical premium increases imposed every year by the insurance companies, if your employers' health premiums are currently somewhat below the level where this tax kicks in, in just a few years you and your co-workers will probably join the victims of this unjust tax.

The Senate plan projects that this tax will collect almost $150 billion in the first years of its functioning. But this is based on very faulty economic theory -- in the real world, we know that employers will get rid of decent healthcare plans in order to avoid paying this prohibitive 40 percent tax.

Only the U.S. Senate, apparently, could think that such an outrageous tax is either fair or logical. It is not. Taxing health benefits is dangerous and opens a Pandora’s box, and in a few years it will wreck the existing health benefits of most working people, forcing us to pay an even bigger portion of our income for healthcare. It may also open the door to taxation of other non-wage benefits, such as pensions.

WE'VE SEEN THIS MOVIE BEFORE

Should the anti-labor Democratic Senators who have promoted this tax prevail, they will have triumphed in a two-decade-long effort to tax workers' health benefits. This idea has been around for a while, in various forms. (One version of it was part of John McCain's platform in the 2008 presidential election.) Some versions of the health benefit tax proposal would add part of your employers' cost of health premiums to your W-2 form, as if the money had been paid to you and not to the insurance profiteers. Realizing the voter backlash this would have provoked, lawmakers instead chose to disguise the health tax as a tax on the employer.

Some backers of this tax  claim that it would somehow force workers and employers to shop for plans more effectively, select providers more carefully, therefore lowering prices. They even fantasize that employers will voluntarily hand over to workers, in the form of big wage increases, the money saved in this process.

Those of us who know the reality of working for a boss in America know that employers will either shift the burden of this tax onto workers, or more likely, stop providing health insurance, or switch to a bargain-basement high-deductible plan under which employees, and their children, cannot afford to get sick or injured. The savings from cutting back on employee health insurance will go straight into the boss's pocket -- not into workers' paychecks.  Unorganized workers would have no choice but to accept the higher costs. For union members, the addition of such a costly new item to the collective bargaining table would guarantee strife, strikes, and other hard-fought battles as union members resist the new employer attack.

Believing that taxing health benefits is a good idea are hallucinations that could only spring from the minds of politicians, or the genius economists who failed to see the current economic crisis coming. They obviously know nothing about employment relations or the collective bargaining environment today. Or worse, that they are fully aware of the fraudulent thinking that backs the entire health benefits tax argument and merely see a new opportunity to impose it.

Our union exposed and fought against an early version of this tax proposal almost 20 years ago, when so-called “managed competition” schemes were offered by experts and corporations as a new miracle cure for the healthcare problem. Back then the insurance and health are industries saw the looming health reform push as a danger to their profits – just as they have during the current battle – and promoted “managed competition” as a way to avoid real government action.

The February 5, 1993, UE NEWS led with a front-page article titled, “The Plot to Tax Our Health Benefits.” Quoting Stanford University professor Alain Enthoven – credited as the inventor of  “managed competition” and nicknamed Dr. Frankenstein as a result – the UE newspaper  reported that his proposal would tax benefits as a means to ultimately reduce costs and increase competition among insurers. The article detailed how employers and their front-men like Enthoven were promoting “competition” among HMOs as the way to control costs, and how costs would supposedly be further reduced when workers were press-ganged into buying health insurance coverage. The faulty thinking behind much of the current “reform” effort sounds a lot like what was being said by these guys in the '90s.

These preposterous predictions have certainly been proven far off the mark since that time. The same UE NEWS article quoted General President John Hovis, who said that the politicians promoting the phony reform and the taxing of  benefits "should just cut the bull and come out and say what they really believe – that working people don’t deserve access to quality health care. Even the supposedly 'liberal' solutions... would tax our benefits while leaving our health care system at the mercy of big insurance companies that are largely responsible for creating the present costly mess.” The UE NEWS followed closely the evolution and eventual destruction by the insurance companies of the Clinton health care reform process. And as we continue to do today, our union promoted the only possible solution to the health care mess, a single payer plan which removes the insurance companies from the scene altogether and saves enormous amounts of money while covering everyone.

It’s time to call your members of Congress and tell them; “Don’t you dare tax my health benefits. Period.” It’s time for you to call both of your U.S. Senators and your Representative right now to send this message. They may be reached via the Capitol switchboard at 202-224-3121. It was a bad idea 20 years ago. And it's still a bad idea.