Potential Deal Struck on Excise Tax

CNN is reporting that labor has reached a tentative deal with Democrats on how to fix the excise tax. The details are still sketchy, but this is what they have so far.


Under the outline currently being discussed, which the sources stressed is still fluid, the threshold for the tax on insurance plans would be raised above what passed the Senate - which was a tax on insurance plans costing $23,000 and up for families.

In addition, health care policies for state and local workers and health care policies negotiated by labor unions would not be subject to the excise tax until 2017.

The sources also say a working idea is to remove dental and vision plans from the calculation.

One of the sources familiar with negotiations said that in addition to protecting health plans negotiated under collective bargain agreements, labor leaders are pushing to expand the deal to exempt health plans for all Americans making under $200,000 a year.

AFL-CIO chief Richard Trumka has made looking out for all workers - not just union members - a big part of his platform.

In an effort to ensure that the tax doesn't hit more people than currently envisioned, the working outline includes a mechanism to adjust the threshold for the tax upward in 2013 to avoid an automatic expansion. This is aimed at addressing a concern of many House Democrats that the tax on insurance plans could end up like the alternative minimum tax, which was intended to target upper-income taxpayers but, because of the way it was structured, eventually hit some middle class workers.

That concern of many House Democrats is very well founded, based in fact on aprojection by the Congressional Joint Committee on Taxation, which "estimated that under the Senate Finance Committee's legislation (which was more aggressive than the current version), the excise tax would hit 19 percent of all single-coverage plans in the country when it starts in 2013. By 2019, the tax would impact 41 percent of single-coverage plans and 37 percent of family-coverage ones." Restricting the tax to Americans making over $200K a year just makes sense.

Update: A TPM report shows just how fluid this situation is.

Details were not released, but the White House is expected to share them with Congressional leaders later today. And a source tells TPMDC that the House is not yet a party to any deal.

An agreement would be a big step toward successfully merging the House and Senate bills.

However, a spokesman for the AFL-CIO, Eddie Vale, denied to TPMDC that an agreement had been reached.

"Discussions are ongoing. There is no deal," he said.

An agreement couldn't be said to be reached if the House isn't in on the deal, as getting to 218 has become a dicey prospect. So grain of salt until something official is announced.

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