Pre-emptive strike in health-care debate Unions, firms join forces to oppose tax on premiums

February 10, 1993|By Boston Globe

WASHINGTON -- Labor unions and representatives of companies providing employer-paid insurance have taken a pre-emptive strike at the Clinton administration's health-care plan before it is even drafted, announcing that they will oppose any federal effort to tax premiums on employees' health benefits.

The Coalition to Preserve Health Benefits, of which the 14 million-member AFL-CIO is a member, argued yesterday that taxing health benefits would impose an unfair burden on America's middle class, causing some taxpayers to pay $1,000 more in income taxes each year.

"Managed competition," a health-care proposal under consideration by Congress and the White House, also was criticized. Under managed competition, states would form insurance cooperatives to buy health insurance. Competition for such groups' contracts would theoretically reduce costs.

Taxing health benefits is generally seen as integral to management competition. Proponents argue that taxing employer-paid health benefits would provide an incentive for employers to choose more cost-effective health plans and would raise some of the money needed to cover uninsured Americans.

But Frederick D. Hunt Jr., president of the Society of Professional Benefit Administrators, said the result would be fewer choices and lower-quality health coverage.

While the AFL-CIO's opposition to a tax on health benefits has long been known, yesterday's announcement was the first time labor and employers have joined forces to attack such a proposal.

At the White House, the National Coalition on Health Reform, headed by Hillary Rodham Clinton, has made no announcement about the direction administration efforts at health-care reform may take.

But because the White House has endorsed the concept of managed competition, many health specialists expect the Clinton administration to consider a tax on employer-paid health benefits.

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