Health Care Victory—or Pretzel?

Warning: what follows gets wonky:

Yesterday Rich Trumka announced a deal with the White House: high-cost union health care plans won’t be subject to an excise tax till 2018—five years later than almost everyone else. The rationale: five years will give union and company bargainers the time they need to negotiate lower costs.

What—they never heard of a reopener?

This part of the deal (see more details below) will be universally seen as a giveaway to a special interest, just like Senator Ben Nelson’s exclusive deal for Nebraska.

Let’s step back and look at one of the justifications for the Senate’s original excise tax on high-cost health care plans —before it got tinkered with this week by union leaders and the White House negotiating “past midnight.” The goal was to raise $149 billion to pay for other aspects of the omnibus health care reform plan.

That was always a crock, and internally inconsistent. The $149 billion was to come from two places: (1) $30 billion would be gained because plans costing more than $23,000 for a family or $8,500 for an individual would cost insurers a 40 percent tax, which they would then pass on to employers. Employers naturally wouldn’t want to pay that tax, so they would force employees into cheaper health plans—dang, there goes that source of revenue!

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But (2), generous souls that they are, employers would give workers higher wages to make up for their new crappier, high-deductible, high-co-pay plans. And normal income taxes on those higher wages would add up to $119 billion!

But since neither of those things were going to happen, the $149 billion was never going to happen, either.


Yesterday Rich Trumka and other union leaders announced what they called a big victory—carve-outs from the excise tax. Plans that cover lots of women, older people, retirees over 55, plans in high-cost states—all would get a higher threshold, so the tax wouldn't kick in. Dental and vision coverage wouldn’t be included in what’s considered the cost of the plan. And union-negotiated plans and those for state and local public employees got an even better deal, a five-year postponement on any tax till 2018. With 2018 so far away, who knows what could happen before then? Hey, maybe unions could even elect a Democratic Congress and a new Democratic president who promised us audacious hope and change and real health care reform and … oh, right. We did that already.

I don’t know if the 60 Democratic senators who voted for the original excise tax—and refused to consider the House’s tax on millionaires—will notice that their funding mechanism, which was never going to work, is now officially not going to work. Will they balk at the carve-outs achieved by Big Labor? Do they like the idea of taxing workers’ health plans so much that they’ll settle for this weakened version?

Trumka made clear that the intent of the changes the unions brokered—and nobody can predict what will happen in real life—is to make so many groups exempt from the tax that in practice it will almost never be applied. That’s worthy. But as I listened to Trumka’s explanations of higher-threshold-this and 2018-that yesterday, I remembered the words of an AFL-CIO convention delegate who wanted Medicare for all: “We’re building a pretzel around the right thing.”

John Conyers’ HR 676, the long-suffering Medicare for All bill, is only 30 pages long.

Jane Slaughter is a former editor of Labor Notes and co-author of Secrets of a Successful Organizer.


alcholger (not verified) | 01/19/10

My response to the current state of affairs in healthcare reform is that I am profoundly disappointed, and at the same time, eternally optimistic. My disappointment is in the way we were so easily seduced to believe that electing a single official could be the answer to reforming a financially entrenched system. Healthcare is the largest single industry in the US and they have poured money into virtually every political campaign, often to both sides of a single race.

Disappointed that we have failed to connect with more people. Polls accurately reflect widespread support for a government funded, Single Payer plan, but we have not successfully mobilized those same people into a visible public presence.

It is critically important to find a way to maintain momentum through the present period of high expectations about the emerging bill, and begin to shape a stronger movement around the idea that Healthcare is a fundamental human right. I expect the current bill to accomplish some much needed additional coverage, but fail to control costs and ultimately will not achieve universal coverage.

I am optimistic that we will again learn from our mistakes, as well as other’s successes. I think most people would agree, that important segments of the movement compromised too early, away from support for HR 676, and instead of viewing this like a negotiation, where we "get something" for significant movement, the movement just continued to compromise.

We also should learn from others successes. From the 1964 landslide defeat of Barry Goldwater, the Republican Party, and their financial core, has consistently built a visible activist base. They were able over 35 years to grow that movement around the cultural issues of abortion, gun control and homophobia. Beginning in 2004 those issues began to lose appeal, and in 2008 with the support of the likes of Charles and David Koch,, the cultural message has been infused with an economic message. That message has been shouted loudly and clearly at Teabagger Rallys across the country.

Finally we can learn from the birth of the labor movement, and the emergence of the US version of social insurance, known as the New Deal. All of which grew out of the depression of the 20's and 30's, and the activist response of a well organized, left-populist movement, that was largely independent of the two major political parties.

Unfortunately, there isn’t a wealth of billionaires ready to fund this kind of movement, today. There are glimmers of hope in the election of Rich Trumka, clearly a much more dynamic and motivating leader than the AFL-CIO has enjoyed for my lifetime. Other leaders like Leo Gerard are creating new models for activism, with USW's Main Street Economics message, our global partnership with Unite the Unions, solidarity campaigns with Los Mineros, the Mexican Mineworkers Union and fighting the rampant murder of Colombian trade unionists. It is time for our organizations to renew the growth of a movement for a working class agenda, with financial and institutional commitment that will outnumber the teabaggers 10 to 1, and will mobilize and fight for fair trade, a new Green economy, real universal healthcare, and, an end to foreclosures and control of the national economy. A good place to start would be by organizing our membership who have lost work to unfair trade and this corrupt economy into unemployed workers unions... a ready base of people who might otherwise be susceptible to a rightwing, teabagger message.