03/18/2010 05:12 am ET Updated May 25, 2011

AFL-CIO's Trumka Reminds Dems: No "Reform for Reform's Sake" on Health Care

On the same day that Senator Harry Reid announced that the Senate would consider an "opt-out" public option, AFL-CIO President Richard Trumka reminded Democrats to hold to basic progressive goals in pushing for reform. He told reporters Monday in a conference call, "We cannot be in favor of reform for reform's sake. This is the moment to make sure that it's real and will relieve the daily stress of Americans in paying for health care."

To that end, he promoted a labor-wide "Day of Action" on November 5 in which the AFL-CIO in cooperation with the Change to Win coalition will be promoting the lobbying of Congress through organizing and leafleting in workplaces. As The New York Times summed up:

The A.F.L.-C.I.O.'s new president, Richard L. Trumka, announced Monday that the labor federation would make Thursday, Nov. 5, a nationwide "Day of Action" for union members to press their members of Congress to back sweeping health care legislation.

"We hope to flood the halls of Congress with calls from working families that want to see real reform," Mr. Trumka said in a telephone news conference.

The Nov. 5 effort, he said, will involve a letter-writing and phone campaign at thousands of work sites, where union members will contact lawmakers in Washington to urge them to support a "public option" -- creation of a new government-run health plan that would compete with private insurers.

"We're at a pivotal point as the Senate leadership continues to craft a bill to go to the Senate floor and the House leadership works on combining their three bills," Mr. Trumka said. "Many of us have spent our lifetimes fighting to ensure that all Americans have quality and affordable health care, and there will be no bigger ally in that fight than organized labor."

On two key issues, Trumka, representing the largest labor organization, staked out liberal positions that are more progressive than the proposed Senate bill. In his view, the "opt-out" version that allows states to exclude a public option was not the sort of "robust" public option his group favors.

"It's on its way. It's not there yet," he said.

And he was especially harsh on the excise tax on so-called "Cadillac" health plans (more than $8,000 for an individual) that union members and a Congressional budget committee see as unfairly penalizing middle-class families. But he didn't draw a "line in the sand" saying his organization would oppose legislation that contained any form of taxation of plans, such as the hard-line stance taken by AFSCME (public workers) president Gerald McEntee last week. As In These Times labor writer David Moberg explained:

"I don't think we're going to have to face that," Trumka said Monday during a press conference. "We'll see when we get to that time if it's close enough."

Indeed, he said it would be "fine" to tax Goldman Sachs executive plans. But many so-called "Cadillac" health care plans offer normal coverage but just cost more for various reasons, such as an older workforce, more dangerous working conditions, a high-cost state, or a small employer with one very ill employee.

If the legislation includes a public option to control prices, Trumka argued, the government will need to tax less to provide subsidies, which in any case could be more fairly provided through a surtax on rich people who most benefited from Bush tax cuts.

Even as he criticized taxing high-cost plans, a top White House economic adviser defended the approach as necessary to health-care savings. As ABC News reported:

President Obama's chief economic forecaster went to bat on Monday for a tax on high-priced insurance plans, the so-called "Cadillac tax," calling it "probably the number one item that health economists across the ideological spectrum believe is likely to stem the explosion of health-care costs."

"The Senate Finance Committee bill includes a tax on high-priced insurance plans, suggested by Senator Kerry. A policy along these lines, designed carefully, will encourage both employers and employees to be more watchful health care consumers," said Christina Romer, the chair of the Council of Economic Advisors, in a noontime speech to the liberal Center for American Progress in Washington, D.C.

"It will discourage insurance companies from offering high-priced plans that would otherwise eat up larger and larger shares of workers' wages," she continued. "A policy such as this is probably the number one item that health economists across the ideological spectrum believe is likely to stem the explosion of health care costs."

Romer's full-throated endorsement of the "Cadillac tax" keeps the Obama administration at odds on this issue with some of its closest allies...

As usual in media coverage of this issue, it's been largely framed as pragmatic policy wonks versus those self-serving union folks. In fact, as the Congressional Joint Committee on Taxation, many House Democrats and a broad array of progressive groups in Health Care for America have pointed out:

The 40% tax that kicks in after a plan exceeds $8,000 for an individual or $21,000 for a family will get passed down from insurance companies to consumers. The tax is projected to affect up to 40% of health plans by 2019 - just six years after it takes effect - according to a preliminary analysis by the Joint Committee on Taxation (JCT) and will fall on workers who live in high-cost states, who live in states with few insurers, or who are a part of an older workforce. Health Care for America Now instead is urging Congress to raise revenues from people making more than $250,000 a year.

Taxing health care plans has been rejected by the public in polling, and an earlier version of this same proposal would have directly taxed workers' benefits, as opposed to passing along the costs to workers by taxing the insurance companies with an excise tax of 40%. However it's done, it's a fashionable "solution" to health-care costs that seems unlikely to fly in final legislation, especially in the House, unless it taxes only the true Cadillac plans -- more accurately, the Rolls Royce plans -- of overpaid executives.

Even so, Trumka's blend of insistence on core principles combined with hints of flexibility led one Washington paper, The Hill, to declare: "AFL-CIO President Declares Room for Compromise."

But it's not the sort of compromise that would sell out real health care reform, a possibility that still looms among Democrats as Congress moves closer to finalizing a bill. He's hopeful that Congress will ultimately pass a bill closer to a House version that covers more people than the Senate Finance Committee version and significantly lowers health care costs. He declared, "What gives me optimism is that the American public really senses that health care is possible. They want health care, and they're demanding that it be real health care."

And a recent ad by Health Care for America Now underscores what "real" reform would look like, and it's not penalizing middle-class and working class families: