KHN Morning Briefing

Summaries of health policy coverage from major news organizations

Democrats Appear To Reach Deal On ‘Cadillac’ Tax

The New York Times is reporting that Democratic congressional leaders and President Barack Obama "have reached a tentative deal on a proposed excise tax on high-cost, employer-sponsored insurance plans to be included in the final version of major health care legislation, according to officials familiar with the talks." Details remained murky and Democratic "leaders have been careful to stress that nothing is agreed on in the health care talks until everything is agreed on. But a deal on the excise tax would be a major breakthrough" (Herszenhorn, 1/14).

FOX News says one provision of the deal would increase the threshold for family plans to get hit by the tax from $23,000 to $24,000, and leave in place the $8,500 for individual plans. Also, FOX reports, "State and local workers and union members are exempted until 2017. A Democratic source with close union contacts said labor leaders are not particularly happy with the tentative deal, but are much less angry than they were at the previous plan" (Turner, 1/14).

Roll Call seconds that information, and adds, "The thresholds would still rise 1 percent faster than inflation - a level that critics say would ultimately hurt middle-class families because it wouldn't keep up with rising health care costs." House Majority Leader Steny Hoyer, D-Md., called today's negotiations "very significant," but stopped short of saying a "deal" had been reached (Dennis and Pierce, 1/14).

The Washington Post notes "Administration officials have resisted any change in the 40 percent surtax assessed to such policies, as proposed by the Senate." The Post also suggests negotiations may continue: "Senior lawmakers were scheduled to return to the White House at 2:15 p.m. Thursday, where staff have continued working throughout the day. Gibbs said announcement of any final deal could stretch into early next week, but his tone was hopeful, saying that "tremendous progress" was made in the eight-hour meeting with negotiators on Wednesday" (Montgomery, 1/14).

However, Politico reports, "AFL-CIO spokesman Eddie Vale said reports of a deal were 'false,' and negotiations were ongoing. Rep. Joe Courtney (D-Conn.), who has led the House effort against the tax, said he was not aware of a deal, and had not seen a proposal from labor or the leadership (O'Connor, 1/14).

Not all union groups are responding to the news reports in the same way. ABC News reports, the prominent labor group AFSCME – American Federation of State, County, and Municipal Employees – "has abruptly cancelled a series of nation-wide events organized to attack the so-called 'Cadillac tax' on high-end health care plans" (Klein, 1/14).

The Hill earlier reported that one key participant in the talks is also suggesting a deal: "Democrats are 'close' enough to an agreement on how to pay for a healthcare bill that they're shooting for sending language to congressional number crunchers on Friday, House Ways and Means Chairman Charles Rangel (D-N.Y.) said Thursday." The Hill reported that other House Democrats had said "significant headway had been made on the tax issue, with some saying they've been told that a deal had been struck with labor groups to raise the excise tax threshold to a level that would allay union concerns. ... Rep. Lynn Woolsey (D-Calif.) said Thursday that House Speaker Nancy Pelosi (D-Calif.) had moments ago told her that a deal had been made with labor groups on the excise tax. 'This just shows you that unions really do still matter,' Woolsey said" (Allen, 1/14).

The Hill, in a separate story: In recent health reform talks, White House officials have "steered healthcare negotiations over the most controversial disagreements between the Senate and House in favor of Democratic centrists." In addition to the President's position in support of placing a tax on high-cost insurance plans, "White House officials have also told news organizations that the president supports the Senate plan to create a commission to recommend Medicare spending cuts, a proposal that House Speaker Nancy Pelosi (D-Calif.) has opposed" (Bolton, 1/14). 

A new CNN poll finds that "61 percent of the public favor the House provision, which taxes people with high incomes regardless of the kind of health insurance they have. Twenty-nine percent favor the Senate provision, which raises taxes on high-quality health insurance plans, regardless of the amount of money made by the people covered by those plans" (1/14).

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