Pure and simple, the tax on Cadillac plans was designed to generate revenue for Obamacare. That goal might have been reasonable; but the revenue could just as well have been generated by taxing all such plans or even selecting plans at random. Singling out non-union plans was merely a sop to the unions – a naked bribe to buy their support. Paradoxically, the bribe would make it tougher to raise sufficient revenue. Indeed, the Obama-union pact produced a $59 billion reduction in estimated tax receipts over ten years. And “bending the health care cost curve,” which might justify taxing Cadillac plans, did not justify taxing only non-union Cadillac plans.
Behind the scenes, the dispute over Cadillac plans threatened to drive a wedge between the White House and its union supporters, who played a major role in Obama’s 2008 campaign. The internecine warfare was so intense that AFL-CIO president Richard Trumka tipped off his Democratic friends they might not get union support in the upcoming election. One union even warned it would no longer endorse the health bill. So, unless Congress revised the tax on Cadillac plans, the President’s top legislative priority might be jeopardized and unions might sit on the sidelines while Republicans recapture the House.
This sordid episode, piled on top of Sen. Ben Nelson’s special Medicaid exemption for Nebraska, bred more voter cynicism about a political process that had gotten out of hand. A few men and women, behind closed doors, negotiating in secret, kowtowed to politically connected special interests. The losers weren’t represented at the bargaining table. Predictably, they were left holding the bag – penalized for not having a union-sponsored medical plan. As the health bill evolved, its victims couldn’t see or identify the negotiating parties, couldn’t hear the negotiations, and couldn’t protest their victimization. Take it for granted, they were told, that one political party would promote the welfare of all Americans. It just wasn’t so.
That’s why Obamacare is dead.