Skip to Content

Campaign Against Excise Tax Intensifies

Van Roekel and other labor leaders to meet this week with President Obama and Speaker Pelosi

by Tim Walker

As House and Senate negotiators prepare to start writing a final health care reform bill, the National Education Association and other labor organizations are ratcheting up their attack on the controversial excise tax on higher cost health plans, one of the major financing provisions of the Senate bill that passed on December 24.

“Educators have worked tirelessly over the last 11 months to support the overall goal of quality, affordable healthcare for all Americans,” says NEA President Dennis Van Roekel, “but the NEA adamantly opposes taxing the health benefits of middle class families.”

In a meeting on Monday, Van Roekel and other labor leaders will encourage President Obama to support an alternative to the excise tax. These leaders will push a similar message in a meeting the following day with Speaker of the House Nancy Pelosi, who is on record as an opponent of the tax. NEA supports the financing provisions found in the House bill, namely the surtax on wealthiest Americans.

Supporters of the excise tax tout it as a critical cost-control mechanism and insist that any cuts in health benefits that may result would be offset by salary increases. Despite labor groups’ vocal opposition, these talking points went unchallenged by the news media during the fall as the public option and federal funding dominated the headlines. But as the process enters its final weeks and the public option seemingly dead, labor has seized the opportunity to mount an aggressive campaign to educate the public, the media and key lawmakers on the dire effects of the tax.

Key to this effort is shedding light on some of the false advertising surrounding the so-called benefits of the excise tax. Its promise as a engine of cost control, for example, is built on the faulty premise that heath insurance premiums are high because of generous benefits.

In addition, says Van Roekel, the idea that employers will increase wages to offset any cuts in benefits is simply not realistic.

“Working Americans will be the real losers,” says Van Roekel, “because, economic theory aside, employers will be no more willing to grant large salary increases than they are today.”

Indeed, a report released last week by the Economic Policy Institute found that there is no evidence over the past two decades to suggest that employer health care costs determine higher or lower wages.

NEA has also been pressing lawmakers to understand the disproportionate effect the tax would have on women, whose health plans tend be more expensive. According to a recently released NEA paper , “holding middle class women hostage to a taxable threshold when their premium costs are driven in part by the fact that they are women is profoundly unfair. It also means that when health care benefits are cut in response to the excise tax, women will be particularly hurt by any increases in cost-sharing and decreases in coverage.”

“The excise tax is just bad policy,” says Van Roekel.

Labor groups hope that Congress and the president also understand that, once the voting public understands its devastating effects, supporting the tax will be seen as equally bad politics.

The Excise Tax: Myth v. Reality

Proponents of the excise tax on higher-cost health plans make multiple unrealistic and harmful assumptions. In reality, and contrary to the theories used to support the tax, the tax would lead to both bad health care policy and a serious deterioration in workers’ financial standing.

Excise Tax: Unfair to Women

Health reform must move the nation forward in its quest for equality, not condemn women to sex discrimination in health insurance premiums.

Read NEA's Letter to Congress Opposing the Excise Tax.