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In case you've been wondering what this debate over health insurance tax exclusions is actually about, or why unions are pushing health care reformers not to lessen or remove them, this article is for you. Written by a former shop steward, it suggests that union leaders are taking a narrow view of solidarity in an effort to protect their hard-won benefits.
Unions fought hard for health benefits, and they fear employers will stop offering benefits if this tax advantage is taken away. And they're right: Wholesale removal of the employer exclusion without other reforms could cause the complete collapse of the employer insurance system. But only a partial rollback of the exclusion is under consideration as a part of comprehensive health reform. It is hard to argue against taxing a portion of the benefits of higher earners in order to make the tax code fairer and expand coverage for the uninsured. Yes, some unionized workers with benefits would see their taxes go up, but I was taught that we organize to make life better for all workers, not just those in our bargaining units.While rolling back the exclusion does have serious policy benefits, it's not hard to understand why labor is afraid to put this on the table after seeing their other legislative priorities go by the wayside in the current Congress, but now is the time to make health care reform a reality. The only problem I have with this piece is its portrayal as President Obama and the unions not helping Sen. Max Baucus, who is running the health care reform negotiations. In fact, Baucus has rejected outright a number of completely reasonable revenue raising ideas, like equalizing the charitable donation deduction across the board, without an economic justification or even a coherent political argument. The cost-control potential of rolling back the exclusion seems very important to getting health care reform right, but the issue of paying for it all is on the hands of Baucus and his fellow senators, who would rather see a weak health care bill than one wealthy person pay 1 percent more in taxes -- or even deduct 7 percent less of their charitable donations.
-- Tim Fernholz
