US Senate Health Bill Reveals Rift Between Obama, Unions
By Martin Vaughan, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Labor unions took out full-page newspaper ads
Wednesday opposing the U.S. Senate Finance Committee health-care plan - a
warning shot to the White House on an issue that is inflaming tensions between
President Obama and his labor backers.
"Unless the bill that goes to the floor of the U.S. Senate makes substantial
progress to address the concerns of working men and women, we will oppose it,"
said the ad that appeared in the Washington Post and Capitol Hill newspapers.
The ad was paid for by the AFL-CIO and several of its affiliates.
Unions are angry about the absence of a public insurance option, and the
inclusion of a tax on expensive health insurance plans.
Obama said in a Tuesday statement to the press that the bill from Sen. Max
Baucus, D-Mont., is "not perfect." But he praised the Finance Committee's work,
saying it "has brought us significantly closer to achieving the core objectives
I laid out early in September."
Even more worrisome to unions, the president in September endorsed taxing so-
called "Cadillac" - or more expensive - insurance plans, without giving
specifics. His advisors have continued to lobby lawmakers in the House and
Senate to embrace a tax on high-cost plans, according to senior Democratic
aides.
Unions responded vigorously when House of Representatives Speaker Nancy
Pelosi, D-Calif., last month opened the door to a tax on "Cadillac" plans. They
quickly rounded up 175 House Democrats to sign a letter opposing any tax on
health insurance benefits.
The proposal from Baucus would levy a 40% tax on premiums above $8,000 for
individuals and $21,000 for family plans. It would affect only 7% of plans
starting in 2013, but that percentage would rise as high as 40% by the end of
the decade.
Economists within the Obama administration, including Office of Management and
Budget Director Peter Orszag, latched on to the plan because they believe it
will help constrain growth in health-care costs.
When Baucus unveiled the plan to the Senate's Group of Six with whom he was
negotiating, he noted that there would be opposition from unions but that the
White House would "keep the unions at bay," according to people present in those
meetings.
That hasn't happened, as the newspaper ads showed.
The Finance Committee eased the bite of the excise tax by indexing it so that
it will grow more slowly, and giving more generous terms to retirees and high-
risk workers.
But Harold Schaitberger, president of the International Association of Fire
Fighters, said those changes fall short.
"Even with the amendment made, this will really capture a lot of workers who
have had their unions working over decades to build good, sound, health-care
plans."
"There are a number of ways this bill can be paid for, without it resting on
the backs of the middle class," Schaitberger said.
Still, union officials say they want to be supportive of the White House's
goals of expanding health coverage, and are wary about getting on the wrong side
of the president. They want to avoid a repeat of Obama's rift with the private
health insurance industry, which this week escalated into a war of words.
"We are hopeful the White House is going to be helpful to us," said Chuck
Loveless, legislative director for the American Federation of State, County and
Municipal Employees. The excise tax "has just made it more complicated for us,
as it affects so many of our plans," he said.
Loveless also noted that Obama was very critical of a proposal from Sen. John
McCain, R-Ariz., to repeal the tax exclusion for health benefits during the 2008
presidential campaign. "We take the president at his word on that, and we hope
that at the end of the day we will be on the same side," he said.
The White House has also made efforts to preserve ties with unions as health-
care proposals move forward, holding conference calls with union leaders
including one last week with White House Chief of Staff Rahm Emanuel.
Some prominent unions, including the Teamsters and the Service Employees
International Union, didn't sign on to the ads. Some in the labor movement felt
that the tone of the ad was too aggressive, according to people close to labor.
Sen. Dick Durbin, D-Ill., the second-ranking Senate Democrat, predicted the
tax will be scaled back before it reaches the Senate floor. "We don't like to
have our friends in labor not supporting our effort, and I think at the end of
the day we will," he said.
-By Martin Vaughan, Dow Jones Newswires; 202-862-9244; martin.vaughan@
dowjones.com
(END) Dow Jones Newswires
10-14-091617ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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