Health Care Proposal to Tax Insurers May Affect Blue-Collar Workers

The new health care plan unveiled Wednesday by Finance Committee Chairman Max Baucus, D-Mont., raises 60 percent of its revenues from just one provision -- a 35 percent tax on high-end health care policies.

The tax isn't on the people who receive the benefits but on the insurance companies that provide them.

"The real game, at the end of the day to simplify it, is they have to pretend that they're getting some money out of somebody who is not a voter," said Tom Miller, a resident fellow at the conservative American Enterprise Institute.

Such as an insurance company. But most analysts say the effect will be the same because the cost will be passed on.

"Of course we know that will make it more expensive, pass that price right down to the employers," Miller said.

"This is just all appearances," said economist Doug Holtz Eakin, an adviser to Sen. John McCain on his presidential campaign last year. "It's about who sends the checks into the Treasury, but it's not the economics. It's the same policy."

The Baucus plan would impose a 35 percent tax on any plan that costs the individual more than $8,000 a year and a family more than $21,000. Those gold-plated or so-called Cadillac plans are enjoyed by many high-powered executives but most often by another group.

"Many people who work in labor unions who have negotiated comprehensive benefits through their collective bargaining agreements are going to be hit by this tax," Tuffin said.

In fact, AFSCME, the union of public employees criticized the Baucus plan Wednesday and pointed specifically to the fee on insurance plans, saying it "taxes health plans that provide benefits for many middle class families."

And Sen. Jay Rockefeller of West Virginia agrees, saying every coal miner in his state would be hit with higher premiums. Many Democrats see this for what it is -- a way to discourage Cadillac health plans without violating Obama's promise not to raise taxes on those who make less than $250,000.

But the Senate needs that tax because it brings in $216 billion and without it, the plan would violate another Obama pledge: not adding to the deficit.