Health Care: The White House and the Unions Have a Deal

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Health care legislation took a major step toward the finish line today, when the White House and congressional leaders reached a deal on one of the major remaining issues: a proposal, known was the Cadillac tax, to impose a 40% levy on expensive insurance policies. Indeed, it was with the end in sight–and the prospect of a difficult midterm election season to come–that President Obama journeyed to Capitol Hill to declare to House Democrats: “If Republicans want to campaign against what we’ve done by standing up for the status quo and for insurance companies over American families and businesses, that is a fight I want to have.”

Where Obama until recently has stayed out of the details of negotiations over the bill, preferring to let Congress sort them out, he has been far more closely involved in recent days. There have been a series of marathon sessions with House and Senate Democratic leaders this week at the White House. And Obama had served notice to labor leaders at a meeting on Monday that the excise tax was something he would insist upon. Unions had estimated that between 3 million and 4 million of their members would be among the 31 million Americans hit by the tax by 2016.

Obama is supporting the tax not only because it would raise a lot of money that would go toward covering the uninsured, but also because it is a measure that many economists argue could do a lot toward reining in the forces that have been driving up medical costs. The compromise version agreed upon today, however, included a number of modifications aimed at winning labor’s support. Among them:

* A five-year exemption from the tax for policies that were arrived at through collective bargaining, and for those that cover state and local employees.

* An increase in the threshold at which plans would be subject to the tax, to $24,000 for family policies (the original version passed by the Senate would have set it at $23,000) and $8,900 for individual policies (compared to $8,500 in the Senate-passed version).

* An exemption for dental and vision costs, beginning in 2015–a provision that union leaders say could add as much as $2,000 to the threshold at which plans would be taxed.

* Adjustments for policies that cover a disproportionate number of women and older workers–both of whom have higher health costs.

In a conference call with reporters, union leaders also said they had reached a deal on another point that could have far-reaching effects: Unionized workers would be allowed to enter the health insurance exchanges–new marketplaces where consumers could shop among a variety of insurance plans–beginning in 2017. Previously, those exchanges were to be open primarily to the uninsured and to small businesses. White House officials were more vague about this aspect of the deal, with one saying: “The exchange discussions are ongoing.”

The deal signficantly reduced the amount of money that would be raised by the tax. Where the original version would have generated $150 billion over 10 years, the new one would raise $90 billion, union officials said. (White House officials declined to confirm that amount.)

While the deal amounts to a signficant breakthrough, there remain many other issues to be worked out–among them, such thorny questions as abortion. And any final bill still must be “scored” by the Congressional Budget Office, a process that is expected to take a week or more. As a result, sources on Capitol Hill say it is likely that any bill will not reach Obama’s desk until mid-February at the earliest.

UPDATE: The marathon sessions continue. White House spokesman Reid Cherlin offers this readout of last night’s meeting, which lasted until this morning:

The President and congressional leaders continued to work through the differences in the health bills. They made solid progress toward a final package, including common-sense adjustments that strengthen the legislation and make sure it works for middle-class families while bringing down costs and expanding coverage to millions of Americans.

More on the meeting:

— The meeting was held in the Cabinet Room. The meeting began at approximately 9:15 pm and ended at approximately 1:25 am. The President departed the meeting shortly before 1:00 am.

— Members attending this evening:

Speaker Pelosi

Leader Hoyer

Congressman Clyburn

Chairman Miller

Chairman Rangel

Chairman Waxman

Leader Reid

Senator Durbin

Senator Schumer

Chairman Baucus

Chairman Dodd

Chairman Harkin

— Secretary Sebelius attended a portion of the meeting.

— Staff attending this evening included Rahm Emanuel, Phil Schiliro, and Nancy-Ann DeParle.