The Senate Finance Committee's health reform bill includes a tax on so-called "Cadillac" health plans, those that cost substantially more than average. An updated report by CWA's research department shows that the Finance Committee's benefits tax would hit 31 million taxpayers -- one-third of all health plans -- by 2019. That means it cuts deep into the middle class. Although the tax would be collected from employers or insurance companies, they are expected to pass the impact on to workers, in higher premiums, higher out-of-pocket charges or reduced benefits.
"The Senate Finance Committee excise tax is not a tax on 'Cadillac' plans; it's a pick-up truck tax. It taxes plans that are of great utility to millions of working Americans," said CWA President Larry Cohen. "Health care reform should be paid for by making employers who don't pay, pay."
Middle-income taxpayers (those making $50,000 to $75,000 a year) in plans that get hit by the tax would, in effect, have a 1.4 percent tax increase. For those making a million dollars a year in plans hit by the tax, the increase would be just 0.1 percent.
The new report is consistent with previous research showing that "Cadillac" plans are largely a myth - except for those available to corporate executives. Plans with higher premiums generally don't have outlandish benefits. Premiums are high because the workers are older, because the employer is small, because the employee group performs dangerous work that leads to more need for care (such as firefighters or coal miners), or because the workers happen to live in high-cost cities and rural areas.
The latest CWA report finds:
One-quarter of taxpayers making between $50,000 and $75,000 would be hit by the tax.
By 2019, the average tax increase for each affected taxpayer would be $1,318 a year. Between 2013, when the tax would take effect, and 2019, the total impact would be $7,640.
The tax impact on a typical CWA member, with the most popular health plan, will be more than $19,000 over ten years.
CWA believes there are better ways to pay for health reform than a massive new tax on working families. Three of them are contained in H.R. 3200, the House health reform bill endorsed by CWA: making employers pay a penalty if they don't pay their fair share of health costs; modestly increasing income taxes for the richest 1.2 percent of Americans; and a strong public health insurance option to cut costs. Also, President Obama has proposed limits on tax deductions for families making more than $350,000 a year.
The Senate Finance Committee health reform bill includes a tax on higher-cost health insurance. Supporters like to say the tax will hit "Cadillac plans," a deceptive name which sounds like it impacts only lavish, luxurious and pricy coverage.
But the idea of "Cadillac" coverage is a myth. As previous research has shown, health plans with relatively high premiums generally don't have de luxe benefits. Rather, the premiums are high because the work force is older, because the employer is small or because the company is located in a high-cost city or rural area.
Now, a new report from CWA's research department, drawing on data from the Congressional Joint Committee on Taxation (JCT), shows that the so-called "Cadillac" tax will pretty soon be hitting a lot of Chevys. The JCT estimates that the tax would hit 19 percent of individual plans and 14 percent of family plans when it is imposed in 2013 - already more than a narrow slice of the pampered rich.
But, as the cost of premiums continues to escalate at a rate much faster than inflation, the tax would hit millions more working families. By 2019, just six years after it goes into effect, the tax would hit 41% of individual plans and 37% of families. (The JCT analysis was based on the bill before committee amendments; numbers are expected to change somewhat, but not a huge amount, for the amended bill.)
Nearly half of us would be driving Cadillacs - at least, if you trust the Senate Finance Committee to know a Cadillac when it sees one. The CWA report also found:
Employers will respond to the tax by cutting benefits.
The tax impact on CWA members would average $19,300 over the next ten years for a family plan.
The tax on benefits would sting the middle class, but scarcely be felt by millionaires. It would be equivalent to 2.0% of income for households making $50,000 to $75,000 a year, but only 0.1% for families making over $1 million.
Instead of taxing our benefits, the report says, Congress can raise the money needed for health reform by penalizing employers who don't pay their fair share (a provision included in the House health reform bill, which CWA favors), by small increases in income taxes on the richest Americans (also in the House bill), by limiting charitable deductions for families earning more than half a million dollars a year (proposed by President Barack Obama), or by creating a public health insurance option (in the House bill).
CWA joined the AFL-CIO and about two dozen other international unions in newspaper ads promising to oppose the health reform bill just approved by the Senate Finance Committee unless it is changed so that it "makes substantial progress to address the concerns of working men and women."
The ad criticizes the bill for taxing our benefits. "A new tax on the middle class is unacceptable," the ad says.
While "good, affordable health care is an economic and political imperative," the ad says, "the Senate Finance Committee bill is deeply flawed."
The ad also calls for the bill to make all employers pay a fair share of costs, to offer a public health insurance plan option to provide "competition to break the stranglehold of a handful of big insurance companies" and to relieve the cost burden on individuals and families.
The ad appeared yesterday in The Washington Post and other D.C.-based newspapers, according to a report by CNN.
Nearly 200 CWA activists visited Capitol Hill last week, pushing for our goals on health reform - and, especially, insisting on a reform bill that doesn't tax our benefits. Members also spoke out loud and clear with thousands of letters and phone calls, including nearly 9,000 calls to members of the Senate Finance Committee in less than three days.
"We're sounding the alarm on this," CWA's President Larry Cohen told a group of local activists last week, as they gathered at headquarters before fanning out to talk to members of the Senate and House. "It's like Paul Revere and the Revolution."
"If this tax goes into effect, we will get smashed," Cohen told activists from Arkansas, Colorado, Ohio and Washington, all in town as part of an AFL-CIO lobbying effort. The tax, in a bill being considered by the Senate Finance Committee, would cause employers to cut benefits in future bargaining, Cohen said, offsetting the great efforts CWA has made to hold onto benefits this year at AT&T and last year at Qwest.
"All that work is garbage compared to what this bill will do to our health care," Cohen said.
While the federal government needs to raise money to finance health reform, Cohen continued, the benefits tax is the wrong way to do it. Instead, he said, employers who don't offer good health coverage should have to pay a penalty of 8% of payroll, with the money used to help provide affordable coverage to those who need it. "Don't make those who pay pay more," Cohen said. "Make those who don't pay pay."
Over the next 10 years, the average impact of the tax would be $21,529 for each CWA member with family coverage, according to CWA's research department. And while the tax is supposed to target only high-cost insurance plans, as premiums increase with inflation, the tax would hit 40% of all workers with employer-sponsored coverage in 10 years, Frank Clemente, from the research department, told the local activists.
In addition to the CWA activists who joined the AFL-CIO lobbying efforts, about 150 members from District 13 - taking a four-hour bus ride from their district meeting in Harrisburg, Pa., spending 7 hours lobbying, and taking the four-hour ride back - lobbied members of Congress from Pennsylvania, Delaware and New Jersey.
To learn about some of the participants in the lobbying effort, click here.
Among nearly 200 CWA activists who came to Washington last week to lobby for health reform were David and Kelly Arellanes, of Local 6508 in Little Rock, Ark., and Jeanine Maury of Local 7800 in Seattle. Their personal stories are dramatic demonstrations of why the health insurance system must change.
About five years ago, David and Kelly Arellanes and their children went on a family vacation. Kelly fell off a horse, hitting her head and suffering traumatic brain injury. She was helicoptered to the nearest hospital, where doctors told him they could do emergency brain surgery, and "if we decided not to do the surgery, she probably had less than an hour to live."
Then came a trauma of a different kind. UnitedHealthcare, their insurer, said that they wouldn't pay, because David hadn't notified them of the surgery. His cell phone records proved that he had. Then they said they wouldn't pay because the hospital was out-of-network, and Kelly should have come to Little Rock to get surgery in network. That, too, was dealt with.
But the Arellanes family didn't just have hassles, they had bills - several hundred thousand dollars worth. They were able to battle with the insurer to get some paid, but they also spent their savings and their daughter's college fund. "And we're supposed to have the Cadillac plan," David said, noting that his coverage, provided by AT&T, is one of the high-cost plans that would be subject to taxation under a Senate Finance Committee bill.
Jeanine Maury has been "a severe, chronic asthmatic since the day I was born." Her mother was a CWA member at what was then Pacific Northwest Bell, so she had good coverage, until she became an adult. She tried to buy an individual policy, but couldn't find one she could afford, because of her asthma. She got a job that had coverage, but didn't include the doctors who had cared for her all her life; she paid for them out of pocket.
That was okay until she was hospitalized in 1993 - and ended up with a bill for $60,000 for out-of-network care. It took her ten years to pay that off. Now she works for Qwest and has good coverage again, but feels that her job choice is limited. "I still have to choose my profession based on my health."
She figures that she could have bought a house for $60,000 in 1993. Instead, she spent the next decade digging out of debt. Because of her medical bills, she says, "I deferred my American dream for 10 years."
She's also seen the problems of his sister, Jill Cunningham, a diabetic. Jill got insurance, but it wouldn't cover her diabetes, a pre-existing condition, for nine months. During that time, she went untreated, "and her health deteriorated so much she couldn't work. Because of the denial of coverage, you took away a productive member of society, probably for life."
Not all the members who came to Capitol Hill had such compelling personal experiences with the health insurance system. Ronald Gay Jr., from Local 4300 in Youngstown, Oh., said he got involved in the campaign for health reform and the Employee Free Choice Act because it would be "good for the labor movement" and because he's always been interested in politics.
Now, he said, he's stepping up his efforts because of the distortions and misinformation that are concerning so many of the members of his local. "If we can continue to put out the correct information," he said, "we can get this across the finish line."
A majority of Democrats in the House of Representatives have signed a letter opposing a tax on benefits, Rep. Joe Courtney of Connecticut announced last week.
A tax on benefits is included in a health reform bill being considered by the Senate Finance Committee. CWA research shows that the proposed tax would do serious damage to our health coverage. In a survey, 89% of employers said they would respond to such a tax by cutting benefits. Lobbying by CWA and other unions has helped strengthen opposition to the proposal.
"I know for a fact that the White House believes in our principle: Make those who don't pay pay," CWA President Larry Cohen told Politico. Instead of taxing benefits, Cohen said, the money to help provide affordable coverage should come from a fee paid by employers who don't offer coverage.
As the letter by Courtney and more than 150 other House members, sent to Speaker Nancy Pelosi, says, the tax would initially hit workers in high-cost regions and those who work for small employers, because both groups pay higher premiums already. And as premiums rise at a rate well above inflation, the tax would "in the long-term, inevitably extend to more and more middle-income Americans across the country."
According to a report by Reuters, Courtney said at a press conference to release the letter, "This letter should send a clear signal to House Leadership that an excise tax on health plans will be an additional and substantial tax burden on working families.
"A majority of Democrats believes that is the wrong direction for health care reform."
Here's a list of representatives who signed the letter. If your representative is on the list, thank him or her. And if not, let him or her know that we don't want our benefits taxed.
This is a huge week - potentially a make-or-break week - for health care reform. The Senate Finance Committee is doing its "markup" on a health bill drafted by its chairman, Max Baucus, a Montana Democrat.
This is a bill with some very serious problems for CWA members - it would slap a tax on benefits for many of us, doesn't do enough to make health care affordable, leaves pre-Medicare retirees in a precarious position, imposes weak penalties on employers who don't pay their fair share, and doesn't offer a public insurance plan option to compete with private insurers.
We'll be taking up the issues one by one throughout the week. But to set the stage, we'll explain the process today.
Why this week is important: Ultimately, any bill that comes out of Senate Finance will have to be combined with another one from the Senate Health, Education, Labor and Pensions (HELP) Committee, and then with a third bill working its way through the House of Representatives.
CWA believes the House bill (H.R. 3200) is a good one, and that the Senate HELP bill is much better than the draft now before the Finance Committee. If we can fix the Finance Committee bill, we've got an excellent shot at producing a good final, combined bill.
What you can do:Write your Senator, especially if your Senator is on the finance committee. Members of the Finance Committee are Democrats Max Baucus (chairman), MT; Jay Rockefeller, WV; Kent Conrad, ND; Jeff Bingaman, NM; John Kerry, MA; Blanche Lincoln, AR; Ron Wyden, OR; Charles Schumer, NY; Debbie Stabenow, MI.; Maria Cantwell, WA; Bill Nelson, FL; Robert Menendez, NJ; and Thomas Carper, DE. Republicans are Chuck Grassley, IA; Orrin Hatch, UT; Olympia Snowe, ME; John Kyl, AZ; Jim Bunning, KY.; Mike Crapo, ID; Pat Roberts, KS; John Ensign, NV; Mike Enzi, WY; and John Cornyn, TX.
The Process: A markup, according to the Senate's own glossary, is "the process by which congressional committees and subcommittees debate, amend, and rewrite proposed legislation." So the committee will go through Baucus' draft piece by piece, adding, subtracting and changing. Members have indicated they plan to offer as many as 500 amendments - potential changes in the bill that the committee would have to vote to include or to ignore. The changed version of the bill would then by subject to a committee vote, and, if approved, sent to the floor.
If the bill clears the committee and gets to the floor, the Senate leadership would have to combine it with another bill, already approved by the HELP Committee. At this stage, the labor movement believes it can get a much better measure to get behind. Then, that merged bill would get debated and amended again, and then an up-or-down vote on the Senate floor.
Meanwhile, H.R. 3200 has already passed three House of Representatives committees and is likely to get a floor vote sometime in the next month. When the House and Senate pass different bills, the two versions go to a conference committee, made up of members from both the House and Senate, to work out the differences. In this case, the White House would probably give strong input to the conference committee. Then, the conference committee's bill would go back to the floor of both houses for a final vote.
There could be a lot of ups and downs through the week, as Senators vote on all sorts of amendments. We're not going to attempt to keep you filled in on 500 amendments, but when the smoke clears, we'll let you know how things stand.
NEXT: HOW THE FINANCE COMMITTEE BILL TAXES HEALTH BENEFITS, AND WHAT THAT WOULD MEAN FOR CWA MEMBERS
More than 800 CWA members attended Congressional town hall meetings about health care reform during August - providing calm but determined counterpoint to angry opponents of reform, who were often outnumbered but seldom outshouted.
"It was probably only 25% of the crowd that was anti-health care, but they were very ugly and vocal," reported Dolores Trevino-Gerber, from Local 2222 in Virginia, who is also national coordinator for CWA's Health Care Campaign. "They booed the rabbi who gave the prayer at the start of the meeting," when the invocation included a hope that all Americans can get the health coverage they need.
According to reports from local and district Health Care Campaign coordinators, 817 CWA members attended 104 town hall meetings, vigils and other events from the beginning of August through Labor Day. The turnout was important, to show that the majority of Americans understand that the current health care system is broken and unsustainable.
The campaign is in a new phase now. Congress is back from its August recess, no longer holding frequent meetings in the districts, but working on bills and headed for likely committee and floor votes this month and in October.
"The work we do over the next eight or nine weeks will be decisive as to whether we improve conditions for our members and our families," CWA President Larry Cohen told local leaders in a conference call last week. "We can't sit and watch and hope. We have to be fired up and get this done."
This week, there's a push to call members of Congress - dial 1-888-580-0792 and you'll be connected -- and to write letters.
Some other reports from members who attended town hall meetings:
Robert Longer, Local 9421, Sacramento, CA.: "This town hall was packed, with a full main room (where Rep. Dan Lungren was actually speaking), an overflow room (where a big screen TV was set up to televise Lungren speaking in the adjacent room) and a crowd outside (where speakers were set-up for folks to listen without a TV). I saw many pro-Obama / pro-health care reform signs being waived or held up, which was a great thing. I did see a group of teabaggers wearing their red tea party shirts too; they were all senior citizens. Speaking of seniors, the majority of attendees were older people who I would guess to be 60-65 + (not exaggerating at all). That said, it was surprising to me that that the majority of these seniors appeared to be anti-Obama / anti-health care reform
Dean Lugar and Valieria Castle, IUE-CWA Local 82162: "Meeting was held in Dublin Va. Local 2204 has the greatest number of members in area and they did a fantastic job of getting people out. UAW and SEIU were also in attendance. Vast amount of people present were of retirement age. Meeting overall was cordial, with only a few of the opposition trying to disrupt the event. After short order the audience became dissatisfied with these few and would start telling them to shut up when they would scream out statements."
Joy Edery, Local 3122, Miami: "CWA in Florida has attended a lot of rallies and town hall meetings. The worst was a rally in Miami in front of the Parrot Jungle. An old man was driving by saw the signs and stopped. He liked what we had to say and stayed holding a sign in favor of health care. Along came a truck with a man who out of nowhere attacked the old man punching him in the face with his fist wrapped around his keys. The old man went down and hit the grass. We were all shocked. The crazy man headed back to his truck. I went for my cell phone to call police while some of my brothers thought he may have a gun so kept him from his truck and one grabbed his keys and threw it in the grass. In the hot sun of over 100 degrees one woman got an umbrella to protect him from the sun. Another man got him water and ice to keep him cool."
Joe Mayhew, Local 1103, Port Chester, N.Y.: "The crowd was 50/50. A lot of folks really wanting information with legitimate questions. SEIU was out in force. About 4 people "testified with legit health problems". 1200 people attended the meeting. Huge turnout from senior citizens."
Hilda Pastrano, Local 6143, San Antonio: "I attended the town hall at Palo Alto College with 2 LPAT members. Rep. Ciro Rodriguez gave outstanding answers to opposition on bill. Our ex-mayor, Henry Cisneros moderated and conducted an excellent town hall. Unfortunately, the majority at this meeting were against the bill. The other four attending with CWA were community members (veterans) one being a doctor that spoke for the bill.
Shannon W Fink, Local 2009, Huntington, WV.: "The meeting went well with great support for Congressman Rahall. Labor and other group got out and had an exceptional rally. Many people offered up questions with several tea baggers speaking out on occasion but labor was there in force. Most of the complaints concerning healthcare came from seniors who just opposed change. In all labor's voice was heard."
Labor and business, Democrats and Republicans can find major areas of agreement on health reform, including a determination that the status quo is unacceptable, according to a panel which included Annie Hill, CWA's executive vice president.
Reaching agreement on reform, Hill said, "is something we can do, but it's also something we must do."
Two former Senate majority leaders, Republican Bob Dole and Democrat Tom Daschle, who had reached consensus on a reform plan through the Bipartisan Policy Center, said at the session that getting together on reform is in the interest of both political parties.
"'Status quo' is Latin for 'the mess we're in,'" Daschle said. "The status quo is the least acceptable of the possible outcomes."
Business executives on the panel sounded a similar note. There must be "a sense of urgency," said Carl T. Camden, president and CEO of Kelly Services Inc. "I'm bothered by what I see as a decline in American competitiveness because of the burden of health care costs."
Beyond the need to control costs, the panelists expressed broad agreement on the need to work for universal access to health coverage. "It's unacceptable in a democracy as wealthy as we are to have the situation we have," said Charles E. M. Kolb, president of the Committee for Economic Development, an organization of business leaders.
And there was consensus on the need for insurance reform and on improving the quality of care delivered. "We pay more than anybody else, and we get less of an outcome," Camden said.
Other panelists were Leslie A. Dach, executive vice president of Wal-Mart Stores, Inc.; Eric Dishman, director of health innovation and policy for Intel Corp.; Judy Feder, senior fellow at the Center for American Progress; and Andy Stern, president of the Service Employees International Union.
While there was broad agreement on goals, the panelists didn't necessarily agree on the precise means to achieve them. For example, Hill and Stern, the labor representatives, continued to support a public health insurance option, while the business leaders did not. The executives, however, did agree with the labor panelists that all businesses need to share in the responsibility for providing (and paying for) health coverage.
"We can't let any single item keep us from achieving the common good," Daschle said. "No one is going to get everything they want, but the worst possible outcome is to accept something that's unacceptable, and that's the status quo."
As part of a broad effort to turn up the heat on Congress to pass meaningful health care reform, CWA has begun running a television ad in Maine. Prepared with our partner organization Health Care for America Now, it is aimed at Sen. Olympia Snowe, a Maine Republican who could be a critical swing vote and voice on the Senate Finance Committee and on the Senate floor.
The ad features Lee Roberts, of Alna, Me., who says that as a cancer survivor, she is worried that she would lose her health insurance if she changes jobs.
CWA has also scheduled a national week of action for next week (Sept. 14-18), with worksite leafleting and a push for another round of calls to members of Congress, especially to potential swing votes.
House and Senate votes on health reform are possible in September and/or October. The votes could be close in both houses, so our actions over the next month or two can help determine the fate of health reform.
