Over at Slate's The Big Money, J. Lester Feder has a good piece about unions throwing a wrench into health care reform. Unions are against one of the most effective and politically acceptable ways to pay for healthcare -- rolling back the tax break for employer-based health benefits. Feder says President Obama won't allow Congress to consider getting rid of this tax break due to his allegiance to unions.

According to Feder, progressives should love this idea, because the tax break actually turns out to be regressive in nature:

The employer exclusion also gives the greatest payoff to the wealthiest people: A worker in the 35 percent tax bracket with a $5,000 benefit package gets a $1,750 tax windfall, but if a low-income worker in the 15 percent bracket were lucky enough to get the same package, he would only save $750 on his taxes. The employer exclusion is a backdoor health insurance subsidy that gives the most help to the wealthiest workers with the best benefits while fully taxing the income of uninsured low-wage workers.



So why aren't unions on board? They like their employer-based health insurance. He explains:

Unions fought hard for health benefits, and they fear employers will stop offering benefits if this tax advantage is taken away. And they're right: Wholesale removal of the employer exclusion without other reforms could cause the complete collapse of the employer insurance system.


Yes, some unionized workers with benefits would see their taxes go up, but I was taught that we organize to make life better for all workers, not just those in our bargaining units.



If only life worked that way. Ultimately, even unions -- the very definition of solidarity among the working man -- are really looking out for themselves. But I think we shouldn't be surprised if unions rally against government-sponsored health care reform for another reason: they consider health care reform their job.

As Feder noted, unions work very hard to get their members good health care coverage. In fact, health care and compensation are probably the biggest issues that prompt most people to join unions in the first place. After all, in the U.S. sweatshops aren't very prevalent these days like they were a century ago, so working conditions are vastly better.

What happens if the government provides for health care coverage for everyone who wants it? Unions no longer need to advocate for it. Or at the very least, workers aren't as concerned about whether their firm offers it, since they can just get it from Uncle Sam instead. That would make joining a union less attractive in the first place, since the only purpose they would really serve would be in pay disputes.

This presents a sort of interesting conflict where, as a government takes more progressive economic action, unions lose their relevance. After all, in a socialist utopia, you wouldn't need unions because the government ensures workers are taken care of. (Before anyone jumps down my throat, I am not advocating a "socialist utopia," just saying what the theory behind it would dictate.)

For this reason, I'm actually pretty surprised unions haven't opposed health care more stridently. I can't figure out why they're okay with the government taking over one of their chief responsibilities. But maybe channeling their dislike for employer-based health care tax breaks through the President is a first step in a new effort.

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