Who Benefits from the Proposed Amendment to the Senate Excise Tax on Employer Health Premiums?

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The Senate health reform bill passed on December 24, 2009, contained an excise tax on high-cost employer health insurance plans; in mid-January 2010 the White House and union leaders negotiated a proposed amendment to the Senate excise tax provision. Several recent studies have evaluated the effectiveness of the tax as a revenue source and cost-containment measure. This report focuses on how the impact of the tax as passed by the Senate and the proposed amendment would differ for union members and workers not covered by a collective bargaining agreement.

While the potential effect on union plans is significant, union members are a relatively small fraction of the total population that would ultimately be affected by the tax, under either the Senate bill (December 2009) or the proposed amendment (January 2010). Key findings:

* Our analysis shows that workers in union firms would be less likely than those in non-union firms to be affected by the tax in the initial years. Workers in union firms would be more likely to be affected compared to their non-union counterparts in the later years, beginning in 2019 under the Senate-passed bill and in 2024 under the proposed amendment.
* The vast majority of employees affected by the excise tax are not covered by a union contract. This is true for both the Senate bill and the proposed amendment. Because many more workers are in non-union plans, fully 80 percent of the workers whose plans would be subject to the excise tax in 2019 under the Senate bill are not covered by collective bargaining agreements. Under the proposed amendment, the amount is slightly higher at 83 percent.
• We project that excise tax revenues will be reduced $41 billion under the White House-union leaders’ amendment. Of that, 71 percent would accrue to employees who are not covered by a union contract.