Baucus' Tin-Plated Health Proposal

A proposal to tax generous health care policies to pay for industry reform would cost employers and their workers.

Senate Finance Committe Chairman Max Baucus would pay for part of his plan by raising $180 billion over 10 years through taxes on so-called gold-plated insurance plans (to get more details about the Baucus plan, click here). The idea picked up steam this summer after Democrats pointed to high-end insurance packages like those offered to executives at Goldman Sachs. President Obama even referred to them as "super, gold-platedt Cadillac plans."

But Helen Darling, who heads the National Business Group on Health, said she'd be surprised if Democrats can raise so much money because there aren't that many super, gold-plated Cadillac plans to tax. And the higher-than-average health plans tend to be offered to union workers and public employees rather than investment bankers.

The average family health plan offered by large employers costs just under $16,000 a year, Darling says. The Democrats held up Goldman's family plan of $40,000 but Darling says there aren't that many plans that rise to that level.

In fact, Baucus is proposing taxing plans that exceed $21,000, according to a summary of the Montana Democrat's plan. That is far more likely to hit union folks, whose rich benefit packages are negotiated with their employers.

Some unions have expressed concern that the tax would hit their workers hard. For one, many unions concede on wages to gain better benefits like health care when they negotiate their contracts. In June, Baucus told Bloomberg News that gold-plated plans gained through collective bargaining could be excluded from the tax. But that's going to shrink the pool of potential revenue to raise money for other parts of health reform.

Democrats count labor among their chief allies. So it's unlikely they're going to tick off their friends in the unions. But that raises a question of how much can actually be raised by taxing these benefits.