Boston Globe

Administration agrees to labor exemptions

By David Espo and Sam Hananel, Associated Press  |  January 15, 2010

WASHINGTON - Union leaders bowed to White House demands yesterday for a new tax on high-cost health plans as part of landmark health care legislation taking final shape in intensive negotiations.

“We are on the doorstep’’ of success, President Obama said.

The tentative agreement on the tax, which included significant concessions by the administration, was disclosed as leading lawmakers set an informal timetable of today for a compromise on the health care bill that Obama made a top priority in taking office a year ago.

Democrats expressed the hope that the agreement would quickly open the way for progress on other key issues where the House and Senate versions of the health bill differ, as well as attempts by the White House to squeeze additional financial concessions from drug makers, nursing homes, and other health care providers.

On a separate issue, makers of generic drugs, backed by the White House and a senior congressional ally, sought to reduce the patent protection that pharmaceutical companies receive for their new-to-market biotech products. The House and Senate bills both limit competition for 12 years.

The president has told lawmakers he wants the tax on high-cost plans included in the legislation to help rein in costs. But that position courted conflict with labor leaders, who fear exposing their membership to higher taxes, as well as with House Democrats, who omitted it from the legislation they initially passed.

The day’s events underscored the urgency with which the White House and top Democrats were working, and the tentative agreement on a new tax on high-cost plans was the most prominent fruit of the effort.

“This was a very critical issue that had to be resolved, and I think it has been,’’ said Representative Rob Andrews, a New Jersey Democrat who told reporters he had been briefed on the emerging agreement.

In a significant victory for unions, the 40 percent excise tax would not apply to policies covering workers in collective bargaining agreements, state and local workers, and members of voluntary employee benefit associations through Dec. 31, 2017.

Representative Joe Courtney, Democrat of Connecticut, and others said the tax would apply to fewer plans than was the case in the Senate bill and would exclude the value of dental and vision coverage. They added it would provide an exemption for residents of states where the cost of health care is particularly high, as well as for employees in high-risk professions.

A union official familiar with the details said the tentative agreement would raise the threshold on insurance policies subject to tax from $8,500 in the Senate-passed bill to $8,900 for singles and from $23,000 to $24,000 for family coverage. Even the new thresholds would be subject to adjustment if unexpected rises in health care occur by the time the plan is effective, the official said.

Richard Trumka, president of the AFL-CIO, told reporters that beginning in 2017, all health plans - union and nonunion - would be permitted to seek coverage in insurance exchanges that would be set up under the bill to allow consumers to shop for coverage issued under federal regulations.

White House officials disputed that, saying the issue was not settled.