The Implications of the Union Health Care Deal

As noted below, one of the provisions of the deals Big Labor cut with the White House on the excise tax on high-value health care plans is:

Providing a five-year transition window for state and local employee plans and plans negotiated through collective bargaining agreements before they are subject to the tax, as typically is done when federal laws affecting workers are enacted so that agreements will not have to be renegotiated. 

If the health care bill passes — increasingly unlikely after the latest deal — then union negotiators will look to limit their health care plans and demand increases in other compensation. And that means wages.

Two immediate thoughts:

  • In about five years, inflation could be looming thanks to a revving economy and years of federal deficit spending. At the same time, unions will be negotiating for big wage increases.
  • Labor’s support for single payer or a public option was always based on the goal of shifting health care costs onto the government, so unions could focus their contract demands on wages. This new deal worked out with the White House achieves the same end, circuitously.

UPDATE (8:55 a.m.): Increasingly unlikely passage? Investor’s Business Daily reaches the same conclusion in its tough editorial today, “Unions Collect A Health Care Payoff“:

[If] the bill passes, unions pay nothing on their health care for years until they can negotiate new contracts, while the rest of us plutocrats shell out a 40% tax on plans worth $8,500 for individuals and now $24,000 for families. No wonder the public is liking this odious legislation less and less.

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