Federal Workers Would Be Hard-Hit By the Middle-Class Health Tax

Richard Eskow

A quartet of union leaders was joined on a press conference call today by Rep. Gerald Connolly of Virginia, to present new data which demonstrates that Federal workers covered by FEHBP would-be hard hit by the Senate’s proposed excise tax on higher-cost health benefit plans. Report findings indicate that single enrollees would be hit by a tax surcharge (or benefit cut) in the first year of the tax, and that their average cost over ten years would be $1,600 per year. Family plans were projected to face a $5,500 annual tax per year by 2022.

Larry Cohen, President of the Communications Workers of America, reminded listeners of the President’s campaign pledge to ensure that all Americans have a plan like the one he enjoyed as a member of Congress. That plan is an FEHBP plan, Cohen noted, saying that these plans are likely to be cut significantly as a result of this task. “Our goal is to say there are other ways to fund this,” Cohen added. The best way, he suggested, was to ensure that “those employers who don’t pay, pay.”

John Gage, President of the American Federation of Government Employees, laid out the union argument against the tax. “The excise tax will rise at about 3%,” he said, “far below the 9% that BCBS plans have averaged over the last decade.”

“Let’s face it,” said Gage, “there will be a major cut in health plans and a major shift of costs onto the back of workers. This excise tax will result in such a huge benefit cut and all these increases, we feel this is the wrong way to go.” Gage also said he would withhold judgment on what he called the “mystical” aspects of the health reform bill – those savings that tax defenders claim will offset the increase in benefit costs. “I have trouble seeing that those administrative efficiencies or more effective care will really stop our health plan from experiencing an extremely high excise tax that will be shifted onto our workers,” said Gage.

“It’s a tax on ordinary plans to help pay for reform that will shift the costs to the workers,” said Fred Rolando, President of the National Association of Letter Carriers, adding: ““There are better and fairer ways to finance reform and we will continue to fight for them.”

Rolando added, ““Any ‘Cadillac tax’ that hits most FEHBP employees is by definition misnamed. This is not a Cadillac tax. It’s a tax on ordinary plans that will shift the costs of reform to workers.” Rep. Connolly was blunt about the tax’s prospects: “I can assure you that the excise tax as currently contained in the Senate bill will not survive,” he said.

(details of the unions’ analysis can be found below the fold)

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