During the last presidential campaign, the unions had to bust their collective asses to get their membership to support Barack Obama. They did it by comparing John McCain’s position with regard to taxing health insurance benefits with that of Barack Obama. McCain promised to tax health insurance benefits; Obama promised not to. Fish. Barrel. Or so it would seem.
A year into his presidency and Barack Obama has flip-flopped on the issue, endorsing a tax on high-end employer-provided health insurance. As currently written in the US Senate healthcare reform bill, individual insurance policies with annual total premiums higher than US$8,500 and family policies higher than US$23,000 would be taxed at a flat 40% rate. This is far from Obama’s original flip-flop plan of taxing insurance companies in order to ding high-flying Wall street executives.
At first glance it appears that only corporate executives with really top-of-the-line health insurance policies would be affected, but Steven Greenhouse, writing for the New York Times, reports that many union members will also be subject to the tax. “... [W]hich by one union survey would affect one in four union members.”
Make no mistake. I’m a union supporter through and through. Always will be. Since 2006, I’ve been quite fortunate to have 90% of my family’s health insurance paid by my employer, the University of Minnesota. I have what I find to be pretty close to top-of-the-line health insurance and the total 2010 cost for my wife and me is US$14,089.40. My co-pays are all under US$150, averaging US$10 for drugs and US$30 per month for dialysis. Either the unions are getting ripped-off on their insurance or they’re overpaying by almost double.
Greenhouse reports that union members “often settled for lower wage increases in exchange for more generous health benefits.” Just as a frame of reference, I took a 10% salary and time cut and my portion of my health insurance costs went up. But the unions have expensive lobbyists; I don’t.
I don’t know enough about the union insurance plans to have an opinion about whether or not they should be taxed. But when Senator Max Baucus (D-Montana) aide Erin Shields tells Greenhouse, “This is a tax on insurance companies, not on workers,” it’s disingenuous at best. Shields maintains that the tax will hold down costs for consumers by forcing employers to find insurance plans that are below the threshold. The reality is that health insurers will either raise premium prices above the threshold or, more likely, raise co-pays and deductibles significantly.
The US House healthcare reform bill would pay for itself, in part, by raising taxes on couples earning more than US$1 million annually.
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