On Fox, Forbes' Barret falsely claimed "Cadillac" tax is "not going to affect the unions"


On the January 16 edition of Fox News' Forbes on Fox, while arguing that the health care plan is an example of Washington "play[ing] favorites," Forbes associate editor Victoria Barret falsely claimed that it "sounds like" the "tax [on] expensive health insurance plans" is "not going to affect the unions." However, most of the recently announced changes relating to proposals to tax "Cadillac" health care plans apply to all workers and unions will be subject to the tax after a transition period ending in 2018, which was made in order to allow unions time to negotiate less expensive plans for their workers.

Barret: it "sounds like" the "tax [on] expensive health insurance plans" is "not going to affect the unions."

From the January 16 edition of Fox News' Forbes on Fox:

BARRET: I want to go back to a point that Rich made, which is what we're seeing is, the health care plan out of Washington is just a series of who gets to play favorites. And we saw this with the administration coming out and saying they're going to tax expensive health insurance plans and oh, some union plans fall under that categorization, so it -- it sounds like it's not going to affect the unions. Now, I mean this is the kind of stuff that the American voters hate.

In fact, unions will be subject to the tax after transition period

Unions will be exempt from tax until 2018. As ABC's Jake Tapper reported, the deal "exempts insurance plans that were part of state and local collective bargaining agreements - union members - until January 1, 2018. They call this a 'transition period' in which unions and re-adjust the way they've negotiated wages and health insurance in agreements with employers."

The extension for unions is to allow time for multiyear contracts to renegotiate

Exemption to give "labor leaders time to negotiate new contracts" and accommodate "multiyear agreements." The Washington Post reported that "workers with collective-bargaining agreements and government employers would be exempt until 2018, giving labor leaders time to negotiate new contracts." The Los Angeles Times reported that "[l]abor leaders said that transition time was needed to accommodate unions and employers with multiyear agreements."

Volsky: "Unlike non-union labor negotiations which can be re-negotiated annually, collective bargaining agreements tie unions down for multiple years." From a January 14 post by the Wonk Room's Igor Volsky:

Unlike non-union labor negotiations which can be re-negotiated annually, collective bargaining agreements tie unions down for multiple years. The temporary exemption allows them to get out of the way of a moving train. After all, collective bargaining agreements are not the same as raise negotiations for non-union employees. While the latter operates under the implicit assumption that a certain percentage of compensation is dedicated for health benefits and is exempt from taxation, a union collective bargaining agreement enters into an explicit trade off between taxable and nontaxable compensation.

Typically, a union negotiates a certain dollar agreement from the employer for total compensation as well as how that will be divided between wages and benefits. The employer could agree to compensate its workers $30 per hour and the union would decide to allocate $20 to wages and $10 to health care. Or, it may choose to spend $15 on wages and $15 on health care. Whatever the case, the unions weighs the benefits of receiving tax deductible health benefits with the immediacy of higher wages and agrees to abide by the agreement for several years.

Without an exemption period, the excise tax would change the rules midstream. Non-union workers with expensive health care benefits could change their compensation package in anticipation of the new tax, but unions with health policies of above $24,000 would pay higher taxes until their contract expires. The temporary exemption still accomplishes the goals of the excise tax - pushing people into lower cost health care plans - but gives unions more time to change their behavior and switch to cheaper policies.

Contrary to Barret's suggestion that Washington is "play[ing] favorites" with unions, nearly all concessions apply to all workers

Value of policies subject to tax reportedly increased for all workers. According to numerous news reports, the value of insurance plans that would be subject to the tax were increased to $24,000 for families and $8,900 for individuals, annually. According to The New York Times, these "thresholds would rise with the Consumer Price Index, plus one percentage point. The thresholds would be further increased if insurance costs grow faster than expected from 2010 to 2013."

Dental and vision plans reportedly exempt for all workers. The Washington Post, and several other outlets reported that, as the Post noted: "[d]ental and vision plans would be exempt starting in 2015."

Premium threshold would be higher for those in high-risk professions. The New York Times reported that "[f]or people in certain high-risk occupations, including police officers and construction workers, thresholds would be higher: as high as $27,000 for a family." The Washington Post and Los Angeles Times similarly reported that the threshold would increase for those in high-risk professions.

Women and older workers reportedly "receive an additional break" on premium threshold due to high cost of their medical care. According to the Los Angeles Times, there would be higher thresholds "for plans with large numbers of older people and women -- whose care tends to be more expensive." The Washington Post also reported that "[p]lans with significant numbers of women or older workers would receive an additional break," and The Wall Street Journal reported that "the threshold would rise further for plans where premiums were higher because the work force was older or had more women."

States with higher health costs also reportedly received adjustments to premium threshold. Both The Washington Post and The Wall Street Journal reported, in the words of The Wall Street Journal, "There are also adjustments for 17 states with particularly high health costs."

Posted In
Economy, Labor Unions, Health Care, Health Care Reform
Fox News Channel
Victoria Barret
Forbes on Fox
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