Did you ever wonder how health care insurance in America became linked with employment?  The answer is that during World War II, when wages were frozen by the government, employers objected that they would not be able to recruit or retain employees.  To offset that problem, the government offered tax exemption for employer-sponsored health insurance so that such benefits could be used as incentives.  This was a real plum for employers, because these benefits were tax-deductible for them as well as being tax-free for the workers.  Workers and their unions who had already connected health insurance with employee compensation, saw it as a realistic alternative to increased wages and have negotiated for better health coverage with employers ever since.  This also served the purpose of refocusing pressure for access to health care onto business and off of the government.  To read a good article on the history of health care coverage in this country, go to http://www.truthout.org/121508R

During the presidential campaign of 2008, workers who might have been leaning toward McCain were warned that he wanted to tax their health benefits.  This helped unify labor behind Obama.  Now,  Obama is advocating taxing so-called “Cadillac Policies” which are often the policies that unions have negotiated for as part of their compensation package.  While it can certainly be argued that access to health care should not be dependent on employers, in the current “health care reform” legislation being decided on in Washington, the employer-based health care access system will be continued with the “reform” components primarily applying to those who have to buy their own insurance because they do not have access to employer-based insurance.  Meanwhile, workers who have negotiated in good faith for healthcare benefits, often in lieu of increases in wages, are now being asked to pay for the “reform” through taxation.  Obama and the Senate have both endorsed this method, and it is included in the Senate’s bill. Unions are angry and many workers feel betrayed.  Because of the political power of organized labor, Obama has agreed to meet with labor leaders to discuss the issue.

A New York Times article on this issues can be found at http://www.nytimes.com/2010/01/09/business/09union.html?hpw Here are a few highlights:

Labor leaders say the tax would hit not only wealthy executives with expensive health benefits, but also many rank-and-file union members who have often settled for lower wage increases in exchange for more generous health benefits.

The tax would affect individual insurance policies with annual premiums above $8,500 and family policies above $23,000, which by one union survey would affect one in four union members.

The Congressional Budge Office estimates that 19 percent of workers — or about 30 million employees — would be affected by the tax in 2016. Economists say most of them would be nonunion, although it is organized labor that has the lobbying clout to take a stand.

While union leaders would prefer killing the tax, some say privately that they could live with it if the threshold is lifted to $27,000, say, or $30,000. They argue that many insurance policies above $23,000 are typical of the coverage in high-cost areas like New York or Boston, or policies that cover small businesses or employers with older workers.