January 14th, 2010
12:54 PM ET
4 years ago

Democrats, labor unions reach tentative deal on 'Cadillac' plans

Washington (CNN) – Congressional Democratic health care negotiators, working with the White House, have reached a tentative deal with labor unions on restructuring a tax on high-end insurance plans, a key proposal to pay for health care reform, according to two sources familiar with the fast-moving talks.

The "Cadillac tax" is one of the major issues dividing House and Senate Democrats, who have been in intense negotiations with Obama administration officials at the White House over the past two days. Labor union leaders were instrumental in the bargaining, attending multiple separate meetings all week at the White House and on Capitol Hill.

Labor officials are trying to protect workers currently receiving high-cost plans from their employers. Over the years, many unions have negotiated generous health benefits - sometimes in lieu of wage increases.

Under the outline currently being discussed, which the sources stressed is still fluid, the threshold for the tax on insurance plans would be raised above what passed the Senate - which was a tax on insurance plans costing $23,000 and up for families.


In addition, health care policies for state and local workers and health care policies negotiated by labor unions would not be subject to the excise tax until 2017.

The sources also say a working idea is to remove dental and vision plans from the calculation.

One of the sources familiar with negotiations said that in addition to protecting health plans negotiated under collective bargain agreements, labor leaders are pushing to expand the deal to exempt health plans for all Americans making under $200,000 a year.

AFL-CIO chief Richard Trumka has made looking out for all workers - not just union members - a big part of his platform.

In an effort to ensure that the tax doesn't hit more people than currently envisioned, the working outline includes a mechanism to adjust the threshold for the tax upward in 2013 to avoid an automatic expansion. This is aimed at addressing a concern of many House Democrats that the tax on insurance plans could end up like the alternative minimum tax, which was intended to target upper-income taxpayers but, because of the way it was structured, eventually hit some middle class workers.

House Majority Leader Steny Hoyer said negotiators are working to get agreement on overall health care package by the end of this week.

"That's been the goal. But it's a goal, it's not a deadline," Hoyer said.

A senior leadership aide said Democratic leaders and White House officials want to send the bulk of the package to the Congressional Budget Office soon, even as soon as the end of this week. This aide said the controversial issues of abortion and immigration likely would not be resolved by then. Because these issues have no impact on cost of the bill, details on these can be worked out harseparately.


Filed under: Democrats • Health care
soundoff (58 Responses)
  1. Darko

    How nice of Obama to negotiate with his Union groups while basically telling the other 85% of American's to shut up and take what's coming.

    January 14, 2010 01:37 pm at 1:37 pm |
  2. good-bye global warming

    So let me get this straight. The democrats are going to tax 'cadillac plans', but you will be exempt if you're a member of a union, right? Imagine if George Bush had said he's going to raise taxes on everyone but oil executives are exempt. The liberal media's collective heads would spin into orbit! Why should unions be exempt? This smacks of cronyism!

    January 14, 2010 01:37 pm at 1:37 pm |
  3. Another back room deal........

    who was paid off this time? Let's see the details.......and why wasn't it on C-Span?.......the lies continue under Obama.....

    Obama is ONE and DONE.

    January 14, 2010 01:38 pm at 1:38 pm |
  4. ObamasRecordDefict

    Catering to the UNIONS, way to go O-BOZO.

    January 14, 2010 01:39 pm at 1:39 pm |
  5. Al in Chesapeake

    Figures the Unions would get a break from this administration. After all they poured big money into the Obama election. Why can't the Unions, Congress and the Administration be forced to take the same insurance policies that the working folks have access to and not
    get away with these Cadillac plans. If this health care bill gets passed only those that can't afford to pay will be footing the bill for
    all those that can. Wake up America.

    January 14, 2010 01:41 pm at 1:41 pm |
  6. Albert K. L.A., CA

    I am a Union Man, but I smell a rat when ever I hear how Unions negotiate insurance plans, sometimes in lieu of wage increases, and here they protect these elites to the point of undermining health care for all. Just who is the insurance salesmen and who gets a kickback? The America I learn to love as a kid promised me I would be an equal with others but here we have “Labor” unions on the side of supporting a caste system. No doubt these modern Labor union types fly first class which should also pay a heavy tax to support liberty, justice and health care for all.

    January 14, 2010 01:44 pm at 1:44 pm |
  7. Bob in Pa

    I want to meet the person with a $23,000 insurance plan !

    January 14, 2010 01:45 pm at 1:45 pm |
  8. Dean

    HMMMM, interesting. Obama and the Democrats will not let Republicans in the meetings on health care but the unions are included in the meetings.
    Obama is making Carter look great.

    January 14, 2010 01:53 pm at 1:53 pm |
  9. Enough

    Obama is in the tank with Unions, he will do whatever it takes to please them.......too bad Obama has ZERO understanding of small businesses and the struggle we are having. Oh well, what did you really expect from a Community organizer who only votes present? You got it, inexperienced and naive.

    January 14, 2010 01:54 pm at 1:54 pm |
  10. Marshall

    Bowing to special interests! That is hope and change...NOT!

    January 14, 2010 01:55 pm at 1:55 pm |
  11. valwayne

    Don't you wonder what corrupt deal was made to get this agreement and how many tens of billions or hundreds of billions it will cost the rest of the nation for a cozy corrupt deal with the Unions?

    January 14, 2010 01:56 pm at 1:56 pm |
  12. once upon a horse

    I figured that somehow they would,,,,,you always "dance with the one brung with"!

    January 14, 2010 01:57 pm at 1:57 pm |
  13. Mike in MN

    Why are these negoiations not on C-Span? Why should there be special treatment for state and local workers and union workers? Why should someone who's employer freely provides them with a cadilac plan without it having to be negoitataed by a union boss, be taxed differently than government or union workers with the same type of plan? Whether or not you work for the government or belong to a union should have anything to do with it. That is a type of unequality that is no different than racism. And Obama supports this kind of union and government privilaged crap.

    January 14, 2010 01:59 pm at 1:59 pm |
  14. R

    wow,
    The labor unions are going to sell out their members for a 7 year exemption? How does that help anyone not retinring after 2017?

    It is really sad the union leaders agreed to that.

    January 14, 2010 02:00 pm at 2:00 pm |
  15. Steven

    They have to come up with a better name for this tax. "Cadillac" has long ceased to mean anything of high value. However if you want the tax to be for mediocre quality health plans at a premium price then "Cadillac" fits perfectly.

    January 14, 2010 02:03 pm at 2:03 pm |
  16. MT

    So are the Senate, Congress and our other "representatives" Cadillac Plans subject to the same tax?

    Or just another of the many "good for the American public" deals that applies to everyone except our illustrious representatives.

    January 14, 2010 02:03 pm at 2:03 pm |
  17. bill

    And this does not sicken you. Since when do we need big labors approval. A house and Senate reconcliation run by the whitehouse? I honestly can not understand how everyone is not really scared and bothered by this. It effects everyone in this country, and I dont care if you are rep or dem, you would think an open honest debate would produce something better than this ugly mess 60 % of the electorate cant stomach.

    This process is nuts, leak a bad idea, see who freaks out, then cut a deal to water it down so its still a bad idea, but not as bad for those originally opposed because they get paid off some how on the backs of the rest of the taxpayers.

    Got to give Obama a win. WHY?, you want a win, craft sensible targeted legislation. Not massive complete socialistic overhaul.

    January 14, 2010 02:03 pm at 2:03 pm |
  18. Ms S Callahan

    With the state of the economy..and it's pending direction....the directive to tax at $23,000 will be achieved by next year...it needs to be higher to be fair.

    January 14, 2010 02:03 pm at 2:03 pm |
  19. joec

    Yeah, great plan, tax the people who work hard and have health insurance. By the time BLObama's done we all will be wearing nothing but a barrell around us. This guy is nothing but a thief and its time to stop the lunacy of taxing everything under the sun. I hope the moderates wake up by 2012 and realize another term of this joker and they may not have anything left. Anybody but Obama in 2012.

    January 14, 2010 02:04 pm at 2:04 pm |
  20. obama the liar

    another typical back room deal (transperency according to obama) to appease the union goons and trial lawyers.u r welcome America taxpayers.

    January 14, 2010 02:06 pm at 2:06 pm |
  21. J.C. - Independent 4 Public Option

    We really should scrap all employer-based health insurance altogether. When employees feel it's their employer that is paying for the care, or vice versa, there is no incentives to cut down health care costs except for the health insurance company, which works with health care providers such as hospitals and doctors to shift costs from government plans to private plans. At the end, the consumers and taxpayers are paying higher costs for the products and, of course, we can no longer compete globally for exports.

    We need Universal Health Care to cut down health care costs. Then every doctor or hospital in the nation will be in the network, and every service is charged the same price. Premiums that are spent on denying medical claims, filtering out non-profitable patients, marketing, and profits need to be taken off our health care system. What's left to compete with would be the quality of service at much lower costs.

    January 14, 2010 02:07 pm at 2:07 pm |
  22. Marie - Reno, NV

    Glad to see the income threshold of $200,000 included in the 'fluid' talks. Excluding dental and vision is a great idea, seems rates for most family coverage is around $12,000 a year for HMO plans, though lots of PPOs get pretty close to the $24,000 for not-so-cadillac families plans. Nice to see some practical improvements coming out of all this!

    January 14, 2010 02:09 pm at 2:09 pm |
  23. RC

    These people really just don't get it. How do not realize that it is not "fat cats" that have these plans but middle class americans who sacrifice a larger salary for better health insurance.

    January 14, 2010 02:13 pm at 2:13 pm |
  24. Steve in Ct

    So let me get this straight. The ruling party has invited labor unions to input on decisions that'll be the future of all Americans while locking out of these input of the other party, a system designed by our founding fathers of checks and balances to assure a government of, for and by the people, not special interests. And how many are still blind to where Obama is taking our nation???????? Wake up before it's too late and the protection of our constitution is gone forever. He charmed his way in and still some of us are too stubborn to see what's happening to our future. Can you say "Big Brother"?

    January 14, 2010 02:14 pm at 2:14 pm |
  25. marlene

    See, the media gets the details about the conference negotiations without C-Span, as I knew they would. Marlene in Mich

    January 14, 2010 02:14 pm at 2:14 pm |
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