APWU, Other Federal Unions Assail Senate Bill’s Excise Tax on Healthcare

Calling it “absolutely the wrong way” to pay for healthcare reform, APWU President William Burrus was among leaders of federal and postal unions objecting to the Senate bill’s proposed excise tax on many insurance plans.

“Imposing an excise tax is not an equitable means of financing healthcare reform,” Burrus said at a press conference. “We need reform now more than ever, but federal and postal employees and other middle-class Americans across the country should not be asked to shoulder the burden of paying for it.”

Two reports released Dec. 8 show how the Senate healthcare bill’s “Cadillac tax” on higher-cost health plans would be detrimental to “Chevy” plans like those in the Federal Employees Health Benefits Program (FEHBP). The studies were released at a press conference sponsored by the APWU, the American Federation of Government Employees, the National Association of Letter Carriers and the Communications Workers of America.

“This tax would result in huge benefit cuts, and increased co-pays and deductibles for federal and postal employees,” Burrus said. “It is absolutely the wrong way to pay for this legislation.  Health insurance reform simply should not be financed by burdening workers and the middle class with an excise tax.”

The two reports conclude that the “average” plans would try to avoid the excise tax, and would shift costs to employees.

One report found that Blue Cross/Blue Shield Standard plans, which cover nearly half of all federal employees, will result in an excise tax on family plans of more than $20,000 per worker over the first 10 years, or about $2,000 a year. For individual plans, it would be about $1,600 additional each year.

A second report examined Blue Cross and 10 other FEHBP plans, which cover 75 percent of all federal employees. The study found that for individual coverage, 5 of the 11 FEHBP plans would face the Senate excise tax within the first three years, and that for those with family coverage, 4 of the 11 plans’ members would face the tax in the first six years.

“The Senate should find other solutions,” such as those found in the House reform measure, Burrus said, “to pay for the reform that Americans deserve. The final bill must include basic principles including coverage for all, no pre-existing standards, and a funding mechanism that does not fall heavily on workers and the middle class.”

The reports, available at www.healthcarevoices.org, show that the Senate excise tax would be imposed mainly on the middle class and would raise $150 billion over 10 years. In the healthcare reform legislation approved by the House (H.R. 3962) and supported by the federal unions, all employers would be required to provide coverage, which would raise $135 billion, and the richest 0.3 percent of Americans would be assessed a surtax, which would raise $460 billion.

Rep. Gerry Connolly (D-VA) joined the unions at the press conference. “We made a promise that the middle-class would not be adversely affected” by healthcare reform, he said. “The current excise tax proposal in the Senate could undermine that tenet of health insurance reform.”

President Burrus agreed and said that it was time to move forward, to “find common ground that leads to a bill signed by a president.”