News Alert: Controversy over "Cadillac Tax" Health Care Penalty Heats Up As Plan Emerges to Exempt Union Workers

By Carter Clews

January 14th, 2010, Fairfax, VA–The growing controversy over the so-called "Cadillac Tax" – or, as some are now calling it, the "Health Care Penalty Tax" — continued to heat up today as stories emerged from behind White House closed doors of an Obama-union deal to exempt unionized workers.

As currently written, the Health Care Penalty would charge insurance companies a 40% excise tax on coverage above $8,500 for an individual and $23,000 for a family. Within three years, according to the Congressional Budget Office, the tax would apply to nearly 20% of all workers. Within six years, it would reach a fifth of all households earning as little as $50,000 annually.

But, according to reports emerging from within the White House negotiations, Obama and top union officials are on the verge of hammering out a deal that would allow the health care programs of unionized workers to be exempted from new tax. If such a deal is finalized, up to 92% of American workers would be subject to the Health Care Tax Penalty, while the remaining 8% of unionized workers would be given what amounts to a free ride.

The Obama-union agreement would hit workers in Right to Work states particularly hard, as they would be forced to cover much of the cost of the new 40% health care penalty. And members of the Senate and House are likely to face stiff opposition if they allow the deal to go through.

"The union exemption from the health care penalty tax is little more than a thinly veiled attempt by Barack Obama to pay off union campaign contributions by penalizing non-union workers and punishing Right to Work states," said Americans for Limited Government President Bill Wilson. "We are calling upon members of Congress from Right to Work states to oppose the health care penalty outright, to deny the union bosses any form of exemption whatsoever."

Many see the Cadillac Tax-Health Care Penalty as a major hurdle for the Obama White House. If the union exemption is not included, the Administration could face a revolt on its left. If it is included, any one of the 13 senators from Right to Work states could be forced to abandon their support for the health care bill.

Carter Clews is a contributing editor to the Washington News Alert.