Unions Strike Deal With White House on Health Care Excise Tax

House and Senate negotiators have agreed on significant changes to the tax on high-dollar insurance plans in the health care bill, Richard Trumka, the president of the AFL-CIO, announced Thursday.

The tax had become a critical area of disagreement between the House and Senate, with unions and many businesses objecting to the tax on grounds it would unfairly burden middle class workers. The modifications are a major victory for union members.

Trumka said the new health care bill would:

-- Raise the threshold for plans subject to the excise tax, which would begin in 2013, from $23,000 to $24,000 for families, and from $8,500 to $8,900 for individuals;

-- No longer include dental and vision insurance toward the excise tax beginning in 2015;

-- Adjust the thresholds of the plans upward for older and female beneficiaries, who usually have more expensive health care costs;

-- Tag the rates for the thresholds to the Consumer Price Index, plus one percent annually;

-- Exempt all health plans for state and local government employees, as well as all plans negotiated through collective bargaining, from the excise tax until 2018;

-- Allow collectively bargained health plans to access the new health insurance exchanges in 2017. Those plans had been excluded from the exchanges in earlier versions of the bill;

The changes will cost the overall bill $60 billion, meaning the tax will raise $90 billion in revenue, rather than $150 billion as originally planned.

Trumka called the agreement a "milestone" for organized labor, but said the health care fight is not over. He did say his union will endorse the Democrats' health care reform effort, "subject to the final bill."

Jerry McEntee, the president of the American Federation of State, County and Municipal Employees, said his union members are on board with the agreement. "I had a conference call with 75 to 100 of our leaders today," he said. "As we went over the details, our people were very, very pleased by it. They're ready to fight for it."

The new agreement on the tax resolves one of the final and highest hurdles for Democrats working feverishly to produce a final bill on health care reform as soon as possible.

Rep. Joe Courtney (D-Conn.), the leading voice in the House against the excise tax, said that provisions that would raise the thresholds based on age, gender, and geography "sound promising," but he could not endorse the plan until he's seen it. "The devil is in the details and I will reserve judgment on any compromise until I have had the time to review the proposal," he said Thursday.

Two sources have told Politics Daily that a final bill could go to the Congressional Budget Office for evaluation as early as Thursday night or Friday morning.