The best thing about American labor leaders is that they
don't beat around the bush. Judging from the reports I've heard from both
sides, the union leaders who met with President Obama this week to air
their concerns about the nearly finished health care reform bill lived up
to that reputation.
They made their objections clear and they put them in a political
context that no one could miss.
As a result, Obama and his White House faced the first real test of
their values and their backbone a decision that would signal to friend
and foe alike what is ultimately important to this administration in
From the start of the long health care debate, Obama has insisted that
in addition to extending insurance coverage to millions of Americans, any
bill he signs must be designed to reduce health care costs for the bulk of
those already insured.
Both the House and Senate versions of the legislation are chockablock
with ideas for field trials and experiments with cost-saving ideas. But
only the Senate version has something that the Congressional Budget Office
and most outside experts think could if it worked produce billions of
dollars of savings in the first decade after it passed.
It is the proposal to slap a 40 percent excise tax on the most
expensive of private health insurance plans, those that cost individuals
more than $8,500 and families more than $23,000 in annual premiums. Early
reports after a White House meeting on Thursday suggested a possible
compromise that would raise the thresholds slightly and, for collectively
bargained contracts, delay implementation. The discussions were part of the
overall White House effort to reach a final compromise on the big health
Supporters say the effect of the excise tax would be to persuade
companies and individuals to opt for cheaper policies with fewer benefits,
thereby reducing the upward pressure that has kept medical prices growing
much faster than overall inflation.
No one can guarantee those results, but the only alternative anyone in
Congress could come up with was the one embedded in the House bill a
surtax on millionaires that would presumably have much less effect on
The CBO originally estimated that 31 million people would be subject
to the initial Senate tax proposal and the number would grow rapidly, as
the cost of health insurance continued to rise.
Less than half those people, it is believed, are union members covered
by insurance policies negotiated with employers over the years. But the
unions have taken the lead in protesting this part of the Senate plan, and
the main point of their meeting with Obama was to back him off from his
support for it.
As I heard from both sides, it was not a theoretical discussion. To
reinforce their plea, the union leaders reminded Obama that in the 2008
campaign, he had criticized John McCain for advocating an even tougher tax
on such high-dollar plans. An AFL-CIO official told Obama, "We did seven
pieces of national mail warning our members that McCain wants to tax your
health benefits. We can't tell them now that Obama is the one doing it."
To underline the threat, AFL-CIO President Richard Trumka repeated to
Obama a point he'd made earlier this week in a speech at the National Press
Club, recalling what happened in 1994.
In that year, President Bill Clinton defied organized labor by pushing
through Congress the North American Free Trade Agreement, strongly opposed
by the unions. The NAFTA vote and the failure the same year to pass the
health bill labor had supported led to a massive falloff in turnout by
union members in the midterm election. And for the next 12 years, Democrats
were the minority in the House and Senate.
Trumka warned publicly it could happen again. As another union
official told me, "When this (health) bill passes, if our members find out
their benefits will be reduced, they will be apoplectic. It would be like a
stick of dynamite."
Others are not so sure. A pollster with strong union ties told me,
"This election is going to be about jobs, not health care."