Cadillac Ranch

Jan 11, 2010 9:08am

Labor leaders such as Richard Trumka of the AFL-CIO and Andrew Stern of the Service Employees International Union meet today with President Obama to discuss the tax he supports on so-called "Cadillac" health insurance plans. 

Health Care for America (consisting of the AFL-CIO, SEIU, and others) has been blogging against the proposed tax vociferously and running TV ads against it.

It's also worth noting that then-Sen. Obama was once a vociferous opponent of the Cadillac tax as well — check out his appearance in Newport News in 2008.

"John McCain calls these plans 'Cadillac plans," the Democratic presidential nominee said. "Now in some cases, it may be that a corporate CEO is getting too good a deal. But what if you're a line worker making a good American car like the Cadillac? What if you're one of the steelworkers who are working right here in Newport News, and you've given up wage increases in exchange for a better health care? Well, Senator McCain believes you should pay higher taxes too. The bottom line: the better your health care plan – the harder you've fought for your good benefits – the higher the taxes you'll pay."

That's exactly the argument labor unions are now making.
But President Obama and other health care experts say taxing these generous plans needs to be done to bring health care costs down.

"I'm on record as saying that taxing Cadillac plans that don't make people healthier, but just take more money out of their pockets because they're paying more for insurance than they need to, that's actually a good idea and that helps bend the cost curve," the president told NPR last month.

"That helps to reduce the cost of health care over the long term. I think that's a smart thing to do."

Asked the legislation might end up "taxing people with Cadillac benefits and Chevrolet salaries?" the president said, "keep in mind that what we're talking about is imposing a tax or a fee on insurance companies for providing plans like that. But the fact of the matter is is that the members of Congress, for example, their policy basically costs around $15,000. A lot of people, when I travel around the country, they say, well, why don't we just make sure that everybody has the same plan that Congress has? Well, I think that's a pretty good benchmark and the cost of a plan for members of Congress, which are pretty good health care plans, is about $15,000 a year.

"Right now this fee on Cadillac plans doesn't kick in until $23,000 under the Senate bill," he said. "So I think that we can structure something that protects ordinary workers, makes sure that they are getting a great health care plan, but also makes sure that they're not overpaying in a situation where they're just giving money to health insurance companies that instead could actually be going into their pockets in the form of higher salaries."


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