The health care excise tax compromise

by on January 14, 2010 at 5:15 pm in Law | Permalink

Megan McArdle reports:

And so it looks like they may have reached a deal sooner than otherwise expected: unions get a special two-year exclusion from the tax.

Presumably, the unions plan to go back and get their exclusion extended every few years. 

Here is more detail.  I suppose that would increase the rate of unionization…and increase union support for Democratic candidates, a win-win, no?

1 zbicyclist January 14, 2010 at 5:17 pm

Does this only apply in Nebraska? 😉

2 anon January 14, 2010 at 5:29 pm

unions get a special two-year exclusion from the tax.

No constitutional problems there. Nope. Nothing to see here, move along.

3 Yancey Ward January 14, 2010 at 6:05 pm

Then, what is next is to exempt pensions and wages, negotiated as collective bargaining agreements, from the normal income tax code.

4 n=1 January 14, 2010 at 7:19 pm

Frankly, I’d be more encouraged if the unions got a four-year exclusion. In that scenario when it came time to renegotiate, they’d either be dealing with a lame-duck Obama or a republican president.

5 Dan January 14, 2010 at 8:21 pm

You are in luck, n=1. They’re now saying that union-negotiated health plans would be exempt for the first five years of the excise tax (which starts in 2013), meaning that they will be exempt through the end of 2017.

6 Bill January 14, 2010 at 8:25 pm

I am disappointed in this proposal.

I so wanted to see it funded by a surtax on the wealthy.

Just kidding. But, that was the alternative. Do you want that?

7 Andrew January 14, 2010 at 9:18 pm

“Don’t you want healthcare costs…”

I think you mean insurance costs.

And Jolly nails it. Score one for my helter skelter theory of political progress.

8 Zephyrus January 14, 2010 at 11:19 pm

I, for one, think everyone should be treated equally under the law.

…that’s why I support a head tax!

Obviously this is a bad compromise, indicative of the most unsavory features of our special interest politics. But when one Party refuses utterly to even engage with a bill, and the other Party has just barely enough legislative power to pass anything, AND nearly every member of the latter Party will face severe electoral pain if that bill doesn’t pass… what did you expect, if not for that Party to dig to the bottom of the barrel in an attempt to pick up 60 apples?

9 soccertom January 14, 2010 at 11:28 pm

Judeo-Christian ethic: Any of you guys ever read Matthew 25?

10 David January 15, 2010 at 2:42 am

Here’s a question. Why does the CBO estimate that revenue from the Cadillac tax will go up every year? They expect to collect $7 billion in 2013, $13 billion in 2014, and increasing to $35 billion in 2019. Why won’t most businesses just… downgrade from Cadillac plans and transfer the difference to wages?

11 Max January 15, 2010 at 4:20 am

@Doug: You could try Switzerland, which is after the US the second freest country when it comes to individual liberty. Also, you still have the right to own a gun and you will be in a direct democracy for some parts. But other than Switzerland, I don’t have any suggestions 🙂

12 Andrew January 15, 2010 at 9:13 am


Nope, you can’t blame Republicans for this. “No” is part of a negotiation and the most important part. And I may not have been paying as much attention, but I don’t even remember Bush The Horrid being this quid pro quo.

13 Joe January 15, 2010 at 9:57 am

Uh, Andrew –

So we can’t blame someone for the consequences of their negotiating in bad faith? This hasn’t just been “no, that’s a bad idea.” The Republicans have suddenly opposed all cuts to programs they’ve historically wanted to kill, and have been trying to scotch proposals they themselves wrote or publicly supported. (i.e., all limitations on Medicare are evil; the “death panels” provision to prevent future Terri Schiavos written by Senator Isakson and formerly unanimously supported by Republicans; Grassley criticizing the bill both for having an individual mandate and for not having one.)

So yes, if you’re negotiating in bad faith and the country gets a worse result because they have to go elsewhere, that’s your fault.

Also, if you want to see real quid pro quos, take a look at the handling of Medicare Part D. It was quid pro quo from head to toe – especially, of course, the famous “support us and we’ll support your son’s Congressional bid” ending to the vote.

14 Sean January 15, 2010 at 10:07 am

You are right, soccertom in that Matthew 25 commands Christians to act with charity towards our neighbors, but it does not follow that we need to support socialized medicine in general or this bill in particular. If you look at the beginning of chapter 25, the Lord gives his servants talents which He expects them to use well in the world. Similarly, we must use that which has been given to *us* to do good, not demand that the government use force to steal from others to accomplish our ends.

A few months ago, I was at a city council meeting where a representative from a group that supported a state-run healthcare system in Pennsylvania spoke. This was when PA was roughly 50 days into a budget impasse that lasted weeks longer. Safety net organizations throughout the state were laying off workers and cutting services because they hadn’t received funding. Can you imagine what would have happened if the entire state’s medical insurance program had been dependent on the timely conclusion of negotiations in Harrisburg? Even if a government-run program is a good idea, it does not follow that the current plan under the current government is as well. This bill is a monster stew of compromises in which all of the worst ideas from all sides floated to the top. Opposition to it is certainly not a rejection of Christian charity.

15 Dan * January 15, 2010 at 10:19 am

Holy crap I thought commenters on this site were smart enough to know that Democrats and Republicans play the same games. We have to elect people of integrity from both parties if we’re to get rid of special interests framing the law. However, I’m much happier with this than if the excise tax were so high that no one is affected. I don’t see how the current system can be fixed in any clean way, so I’ll take the reasonable kludges as they come.

16 Andrew January 15, 2010 at 10:58 am


Negotiating doesn’t stop government action, it causes it. If the Dems can get a dumb idea passed without Republican support, they could get a good idea passed, logistically speaking of course, because they are still intellectually and morally incapable.

17 Andrew January 15, 2010 at 11:06 am

Oh, and let me add, I hope they pass the worse possible bill.

If it makes you feel better, blame it on me.

18 Ed January 15, 2010 at 12:00 pm

LET’S NOT FORGET FOLKS, fo r those of you who think the unions are getting special treatment, the top 1% of American households now own more than the bottom 95% combined. Nancy Pelosi’s House Dems were trying to push through a tax on millionaires and billionaires to pay for part of the so-called health reform, a MUCH more democratic and FAIR way to fund reform instead of the Obama White House supported tax on blue collar working people. The Rich got let off the hook, no increase in taxation for them (despite the fact Warren Buffet recently said he is paying an effective rate of 19% while his salaried secretary pays 30%) THE UNIONS DID NOT GET SPECIAL TREATMENT, THEY GOT THE SHAFT.

19 Doug January 15, 2010 at 2:11 pm

No Ed, the people who got the shaft are those in the EXACT same situation as union workers, who have to pay a tax that union workers do not. How anyone can view that as constitutional or morally acceptable is beyond me.

20 mike January 15, 2010 at 6:58 pm

“Nancy Pelosi’s House Dems were trying to push through a tax on millionaires and billionaires to pay for part of the so-called health reform, a MUCH more democratic and FAIR way to fund reform instead of the Obama White House supported tax on blue collar working people.”

Indeed. Singling out “the rich” for increased taxes would be democracy in action. Making the most productive pay for for everyone else is the sine qua non of fairness. Especially those goddamn Jews.

21 Andrew January 16, 2010 at 5:22 am

Here is the crux. The only reason you have to give in to someone holding you hostage is if you can’t walk away from the negotiation. The Democrats are choosing not to walk away from their more extreme members, so they are to blame.

They can’t walk away because they are on deadline. They are on deadline for a problem that is extremely complex and is not a problem right now but in the future. It is an ongoing problem, not something that can be “fixed.” Deadlines don’t make things good, they make things happen. This is a dumb way to run a country. In practice, the Republicans are saying “no” to this bad process and the Democrats are saying “yes” to it.

The Democrats tried to hold the Republicans hostage with an unacceptable bill and threatening the good ‘crat/bad ‘crat routine. The Republicans said “no thanks.” If the bill is good, the Dems win, if not the Republicans win. The Republicans are not responsible for the out-of-control Democrats. It is not their fault that those districts are out of control so the seats are safe. The Democrats could say “no” to those safe seats (and we could have term limits). I think Republicans win this one.

22 belly July 9, 2010 at 5:16 am

McCain wouldn’t look at Obama because he is afraid of him. The meanness, the aggression, the anger, it’s what men of McCain’s stripe do when they experience fear. It’s a cover, sometimes even from their own awareness, of the root feeling. sterling silver belly rings

23 jenny July 26, 2010 at 3:41 am

Ah, yes…let us who almost universally feel New Orleans has a serious litter problem jump all over a representative who actually suggests doing something about it

because we don’t like her politics. And yes, I DON’T like her politics.

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