President Signals Flexibility on Health Plan Tax

WASHINGTON — President Obama told union leaders at a private White House meeting on Monday that he remained committed to taxing high-cost insurance policies as a way to drive down health costs. But he also signaled that he was willing to amend the proposal to “make this work for working families,” a senior administration official said.

The excise tax is a major point of contention as White House and Congressional negotiators seek agreement on a final version of a sweeping bill that would extend health coverage to more than 30 million Americans. The Senate version of the bill includes such a tax on employer-sponsored health benefits; the House version does not. Union leaders deeply oppose the tax.

Mr. Obama’s remarks, at an hourlong session with a dozen labor leaders in the White House Roosevelt Room, came just hours after the new president of the A.F.L.-C.I.O., Richard L. Trumka, delivered a speech at the National Press Club in which he criticized the tax as a “policy that benefits elites” and warned that Democrats would pay a price at the polls if it was enacted.

Privately, Mr. Obama and the union officials used Monday’s session to search for a sort of compromise, said a union leader who was briefed on the discussion. This official, who said the tone of the meeting was friendly, said it was clear that there would be some sort of excise tax in the final bill, but that the president “threw out some new concepts” in how it might be designed.

The 40 percent excise tax would apply to any cost above $8,500 for individual policies and $23,000 for family plans; the Congressional Budget Office has estimated it would generate $149 billion in tax revenues over 10 years, which would help Mr. Obama meet his goal of passing a health bill that does not add to the federal deficit.

According to one union survey, the tax would affect one in four union members. Some union officials, resigned to the likelihood that a final measure would include the tax, are pressing the White House to raise the thresholds at which it would kick in.

Until now, Mr. Obama has taken a relatively hands-off approach to the specifics of the health care bill, instead leaving them to Congress. But last week, in a meeting with House leaders, he made clear his support for the excise tax, which many economists regard as an important way to bring down health care costs. The senior administration official, who insisted on anonymity to describe a private conversation, said Mr. Obama made that point at Monday’s session.

“It was a frank conversation about the excise tax,” the official said, adding, “The president was very clear that he thinks this is a critical part of bringing down costs in the long term and bending the curve.”

But in delving into the nitty-gritty of health care negotiations for the first time, Mr. Obama risks alienating members of the labor movement, who worked hard to elect him.

The machinists’ union announced Monday that its executive council had unanimously voted to oppose any health bill that was financed by taxing the value of workers’ existing health plans, and the general president of the International Association of Fire Fighters, Harold A. Schaitberger, accused Mr. Obama of abandoning his campaign promise not to tax the middle class.

“We held President Bush accountable when he made decisions that had a negative impact on our members’ jobs and lives,” Mr. Schaitberger, who did not attend the White House session, said in a statement. “We will do the same with President Obama.”

Mr. Trumka and other union leaders said before Monday’s meeting that they intended to tell Mr. Obama that the tax would be economically and politically unwise. The union officials support a tax approved by the House: a surcharge on couples earning more than $1 million a year.

Several centrist Democrats have voiced discomfort with increasing taxes on wealthier taxpayers. But Mr. Trumka showed little sympathy for their view in his National Press Club speech.

“Instead of taxing the rich, the Senate bill taxes the middle class by taxing workers’ health plans — not just union members’ health care,” Mr. Trumka said. “Most of the 31 million insured employees who would be hit by the excise tax are not union members.”

On Capitol Hill, some House Democrats agreed. Representative Joe Courtney, Democrat of Connecticut, who has been leading opposition to the tax on high-cost health plans, said he did not see any path to imminent compromise.

“Proponents of the tax minimize the scope of its impact,” Mr. Courtney said. “This is a larger issue than unions. This proposal has a much wider reach than the proponents ever acknowledge.”

At a recent town-hall-style meeting in East Lyme, Conn., Mr. Courtney said, “there was not a union person in the audience,” but people were fired up with concern over the issue.

Mr. Courtney said raising the thresholds would not be enough to meet his concerns. Under the Senate bill, the thresholds would rise with inflation, measured by the Consumer Price Index, plus one percentage point — substantially less than the expected rise in health spending and insurance premiums.

Lifting thresholds “would not eliminate the flaw in the design of the tax,” Mr. Courtney said. “The tax would pick up more and more health plans.”