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Why supporters want Cadillac care tax

TEXT OF STORY

Bill Radke: The action on the big health care bill is not just in Congress. Today President Obama will try to convince union leaders to support a tax on so-called Cadillac health care plans. From our Health Care desk at WHYY in Philadelphia, Gregory Warner tells us what's at stake.


Gregory Warner: Bill George is president of the Pennsylvania chapter of the AFL-CIO and a 50-year union veteran. He helped negotiate some of the big health care plans for Bethlehem Steel.

Bill George: If some people got a Cadillac plan? God bless 'em, we're proud they were able to -- and let me tell you they're paying for that out of their productivity.

And out of their wages. Across the country, unions have given up wage increases in return for better benefits. Sometimes really good benefits.

George: Yeah, Cadillac plan for my employees here, they don't have any copays -- they got dental, they got full hospitalization, doctors, et cetera.

They're called Cadillac plans because the premiums -- paid by workers and their employers -- total at least $23,000 per family per year. That category includes a lot of union plans with very low deductibles and excellent benefits.

Jonathan Skinner: We don't want to have systems in place that encourages people to use too much health care.

Jonathan Skinner is a health economist at Dartmouth. He says the goal of the Senate-proposed tax is really twofold: to raise money to cover the uninsured, and:

Skinner: You want the tax to change people's behavior. And not just consumers but also the insurance companies that provide this kind of coverage.

Skinner predicts that insurance companies will strip benefits and squeeze providers to avoid paying the tax -- which also means the government will collect less revenue.

In Philadelphia, I'm Gregory Warner for Marketplace.

About the author

Gregory Warner is a senior reporter covering the economics and business of healthcare for the entire Marketplace portfolio.

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