House Democrats Fighting Excise Tax (10/8/09)

With the Senate Finance Committee set to vote on health care reform legislation on Tuesday, more than 100 U.S. House representatives have agreed to sign a letter opposing the inclusion of an excise tax on high cost insurance plans. This version of the bill, which would move forward for a full debate in the Senate if approved, includes an excise tax of 40 percent on the health care insurance of millions of workers.

Policy holders would have to pay a 40 percent tax on every dollar spent on individual or family insurance over $8,000 and $21,000. In addition, the tax is tied to inflation, and not the more rapidly rising costs of health care. Workers who now have untaxed health insurance could find that their plan becomes a so-called "Cadillac plan" within a few years as health care costs rise.

"It is important that we fight against a costly excise tax in any health care reform bill, which would unfairly shift costs toward workers, or force them to change to a new insurance plan with more out of pocket costs," said RWDSU President Stuart Appelbaum. "They call this a 'Cadillac tax,' but health insurance isn't a luxury. This could end up affecting middle-class families."

"These taxes undermine strong union contracts that have low deductibles and allow workers to choose their own doctors," Appelbaum added.

The RWDSU is part of a broad coalition of labor unions and advocates of working people that opposes an excise tax in forthcoming health care reform legislation.