Tax on Health Plans Splits Obama and Labor Leaders

January 23, 2010

At last, a final version of the healthcare bill is within reach and President Barack Obama can finally breathe a sigh of relief… or can he? The tax that the President backs is still a sore point among many and it is unlikely that he can get it through without a bitter fight.

Nicknamed “The Cadillac Tax”, the tax aims to target any family health-insurance plans which are valued at more than $23,000 or individual plans that exceed $8,500. Obama firmly believes that the tax will enable the financing of the overhaul of the healthcare plan which will allow another 15 million Americans who are currently ineligible to receive healthcare to become eligible. The near three trillion dollar plan will also force insurers to offer coverage to the sick. The problem with the tax though is that it is perceived as a major burden on the middle class. A sentiment echoed by AFL-CIO President Richard Trumka, who said “Instead of taxing the rich (as the House bill does), the Senate bill taxes the middle class by taxing workers’ health plans”.

Health economists are in favor of the tax which in their opinion will help control costs, while insurers and labor oppose it on many other levels. Trumka claims that almost 31 million non-union employees will be hit by the tax, making them suffer unnecessarily. Obama is due to meet labor leaders in a few days to iron out the issues and come to a settlement. What that will be or if it will reach conclusion is anybody’s guess.