Breaking: White House Reaches Deal with Labor Unions on Cadillac Plans

According to press reports, the White House has reached a critical deal with labor unions concerning taxes on so-called "Cadillac plans," possibly clearing one of the major sticking points that remain for President Obama's health reform package.

While details on the apparent deal remain sketchy, initial signs indicate that the legislation would exempt these high-dollar plans from taxation for several years -- the year cited most often thus far appears to be 2017 -- which would give union bosses time to re-negotiate contracts to permanently exempt their members from being penalized under the new health care tax regime.

A scathing editorial from National Review cites this deal as the worst example of a political kickback in a bill laden with such rewards:

Even after all the unsavory bargains and rotten deals that have characterized the rush to get this thing passed (the “Louisiana Purchase,” the “Cornhusker Kickback,” etc.) the “Labor Loophole” surely takes the prize. A few Democrats in the Senate already tried this trick and were laughed out of the smoke-filled room, so nakedly obvious was the special-interest favoritism at work. That the Democratic party is seriously reconsidering this deal is a sign of how desperate it has become to pass a bill — any bill — that shoves the federal foot through the waiting-room door.

This tentative agreement comes in the wake of a major lobbying push by the president, as reported by the Washington Post:

For Wednesday's session, Pelosi, Hoyer, Reid and other key Democrats gathered in the Cabinet Room just off the Oval Office -- no cellphones or BlackBerrys were allowed, a restriction that left aides on Capitol Hill starved for information. While Obama also spent time monitoring and coordinating the response to the crisis in Haiti, participants said he was in the room for hours, along with his chief of staff, Rahm Emanuel, and other senior administration officials.

Participants and lawmakers briefed on the talks said the group went through the health-care package section by section. Given the enormous difficulty Senate Democrats had in mustering 60 votes to avert a Republican filibuster, House leaders are under intense pressure to adopt many of the Senate's provisions. House leaders have all but conceded defeat on the creation of a government-run insurance plan, a top priority of House liberals that Senate moderates roundly rejected. Meanwhile, Obama last week endorsed one of the Senate's most contentious revenue-raising provisions: a 40 percent excise tax on high-cost insurance policies that is deeply unpopular among labor unions and many House members.

A small group of labor leaders met separately with administration officials on Wednesday to try to find ways to lessen the impact of the tax on union members. Meanwhile, House leaders have signaled that they might be willing to accept the tax on high-cost insurance plans -- set by the Senate at $23,000 for family coverage -- if the threshold were raised to about $25,000. The lost revenue would be replaced by some version of a tax on the wealthy, which the House prefers.

The health care legislation is now expected to move forward quickly, toward a possible vote in the next two weeks. According to a Congress Daily interview (subscription required) with Rep. George Miller (D-CA), chairman of the House Education and Labor Committee, a deal could be pending that would allow the final conference committee-approved legislation to be scored in the next few days.

"We hope to be able to send in the next couple days our changes to CBO," Miller said.