ALPA, Other Labor Unions Push Back on Health Care Tax Proposal
White House, Key Congressional Members Support Our Position

July 16, 2009 - Late last week, a senior White House official informed ALPA’s president, Capt. John Prater, and other union leaders that President Obama would not support taxing health care. The House version of health-care reform does not contain this onerous provision.

ALPA lobbyists and other labor groups have been working behind the scenes urging congressional lawmakers and staff to back away from any proposal that would tax health-care benefits. More than 5,000 ALPA members who responded to ALPA’s grassroots “Call to Action” on health care supported this effort. They wrote letters and placed phone calls to their respective senators and representatives opposing any legislation that would tax health plans. Several employer groups also joined labor groups to oppose taxing health-care benefits.

ALPA has argued that taxing health-care benefits would encourage employers to offer low-cost plans of inferior quality—or no coverage at all—to avoid paying taxes on health-care benefits, adding even more Americans to the roster of the uninsured. Unions have much to lose in this fight, as many have agreed to lower salaries in order to preserve quality health-care benefits. If the tax is approved, those health-care plans would be in jeopardy.

The fight now shifts to the Senate, where some senators are continuing the push to pay for health-care reform by taxing these plans. Sen. Max Baucus (D-Mont.), chair of the Senate Finance Committee, Ranking Member Charles Grassley (R-Iowa), and other like-minded senators such as Ron Wyden (D-Ore.) have reportedly suggested taxing only those health-care plans that cost the employer more than $17,000 per employee each year. However, other Senate Finance Committee members, including Sens. Robert Menendez (D-N.J.), Jay Rockefeller (D-W.Va), Charles Schumer (D-N.Y.), and Debbie Stabenow (D-Mich.) are strongly against the idea and have openly supported alternatives.

ALPA is encouraging its members to reach out to their members of Congress and voice their opposition. The Senate Finance Committee is currently debating the bill internally, which—if passed by the Committee—will go to the full Senate for a vote by the end of July, according to most reports.