One provision of the health care “reform” bill now being crafted behind closed doors by Washington Democrats is a tax on health care plans with annual premiums of over around $25,000 (the exact number varies weekly).

It is proposed that union members won’t have to pay this tax. Like Nebraskans, they are to be exempt from a health care tax that applies to everyone else.

[U]nion officials … [said] the tax would be phased in and would exempt workers in collective bargaining agreements, as well as state and municipal government workers, until 2018, costing $60 billion in revenue over a 10-year period.

Under the agreement, non-union workers with expensive health plans would reportedly begin paying the tax in 2013.

Consider; Ben Nelson’s bribe was only $100 million for a Nebraska population of 1.8 million – about $56 each. The unions are getting $60 billion for their 16 million members – about $3,750 each.

Exempting union members removes $60 billion from the $150 billion the “Cadillac” tax was to have raised. That’s 40%, but the approximately 16 million unionized workers in the US only make up around 12% of the US workforce. This says something about who is inflating health care costs. According to the Obama administration, the reason for the tax is to reduce health care costs.

It is further worth noting that union membership for public sector workers includes about 37% of those workers, nearly 5 times higher than the 8% unionization rate for private industry workers.

The SEIU, for example, has 2.2 million members. 1.1 million work in health care and 1 million in the public sector. The SEIU contributed over $60 million to Barack Obama’s presidential campaign. As Andy Stern said in May 2009, “We spent a fortune to elect Barack Obama — $60.7 million to be exact — and we’re proud of it.”

Nebraska’s motto is “Equality before the law.” SEIU’s is “Stronger Together.” Unlike Nebraska’s motto, the SEIU motto is for members only.

Aside from the reciprocal affinity of Democrats and unions, you may wonder how anyone can argue the “Cadillac” health care tax shouldn’t apply equally to those 12% of covered individuals who receive 40% of the “taxable value.”

Unions and Democrats contend the tax would affect union members unfairly because unions have what are known as “contracts” with their employers. These contracts specify that part of the compensation package for union workers is a “Cadillac” health care plan – you know, the kind that destroyed General Motors. Besides, say the unions, taxing their health care would mean Obama had broken his promise not to raise taxes on those making less than $250,000 per year.

It’s hard to see how both these arguments do not apply to every worker. Health care is very often part of your compensation, whether you have a union contract or not. “Ah yes,” say the unions, “but we have long-term contracts based on current health care tax regulations.”

Sorry. I still don’t get it. Can’t these contracts be renegotiated? Or simply abrogated? I am not one to support arbitrary dissolution of contracts by the Federal government, but this administration has no problem with the concept. Remember the Chrysler bondholders who were told they’d have to take what Obama told them they could have so he could give Chrysler to the UAW? The bondholders had contracts. Remember those AIG bonuses, approved as part of the bailout by our Congress? The bonuses that got everyone so upset? Those were contractual.

Those contracts didn’t matter, why should the unions’? Because they’re a major source of support for the takeover of health care by the government.

Adding to the hypocrisy, to make up for the union exemption the Democrats are talking about further increasing the Medicare payroll tax and applying it to capital gains. Isn’t the Medicare tax a “current health care tax regulation,” too? Won’t this raise taxes on people making less than $250,000 per annum?

Finally, we must wonder about another “union” contract: The Constitution. Where, in that contract, does it say Nebraska, Louisiana and labor unions get special treatment? Where does it allow the federal government to force you to buy a specific product or pay a fine to the IRS? On the face of it, and for but one example, the 14th Amendment equal protection clause would seem to prohibit such statist intervention.

If contracts mattered, that is.

2 thoughts on “Contracts”

  1. I don't have anything to add here of value except to say that this is an excellent post.Hershblogger, you do not get nearly enough credit for producing consistently good analysis and commentary. Please keep up the fight.