Democrats and Labor Strike a Deal on Insurance Tax

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Congressional Democrats and labor leaders reached an agreement on taxing expensive health insurance policies yesterday, inching Washington a step closer to actually making health care reform happen. The negotiations raised the threshold at which the high-cost polices will be taxed ($8,900 instead of $8,500) and pushed back the date when the tax takes effect (2015 instead of 2013).

So now labor unions are appeased, but Democrats have new problems to deal with.

First, there's money. As it stood in the Senate bill, the tax would have generated $149 billion over 10 years and the new version brings in just $90 billion. Democrats are going to have to figure out a way to make that up. The deal has also opened Democrats up to more criticism about the party's willingness to cut deals with supporters. Expect to hear more quotes like this one from Minnesota Rep. john Kline in coming days: “This latest back-room maneuver is another example of how administration officials and their enablers in Congress will cut deals with their special-interest allies to impose a government takeover of health care."

Accord Reached on Insurance Tax for Costly Plans
[NYT]