Reporting from Washington - The White House and labor leaders agreed today on a formula to tax high-cost insurance plans, removing one of the last obstacles to President Obama's healthcare overhaul, officials said.

Under the agreement, reached after an intense round of negotiations this week, union leaders dropped their opposition to the so-called Cadillac tax in exchange for concessions to limit its scope. Organized labor had bitterly opposed the healthcare tax, arguing that union members had negotiated generous benefits in lieu of pay increases.

The compromise would raise the value of family plans subject to the tax from $23,000 to $24,000 and exempt the cost of dental and vision plans. It also would postpone the tax's application to healthcare plans negotiated under union contracts.

While politically powerful labor leaders support the plan -- which Obama considers crucial to controlling healthcare costs -- rank-and-file workers now must be convinced that it is not a betrayal of Obama's campaign promise to oppose any new taxes on their health benefits.

Obama spoke on Capitol Hill to the House Democratic Caucus this evening, candidly acknowledging the political challenges lawmakers will face in defending his healthcare overhaul ahead of November's midterm elections.

"Believe me, I know how big a lift this is; I read the polls," Obama said. But he reassured party lawmakers that the political climate would shift once voters learned more about the bill's impact.

"If Republicans want to campaign against what we've done by standing up for the status quo and . . . for insurance companies over American families, that is a fight I want to have," Obama said.

Republicans immediately criticized the "Cadillac tax" compromise, especially the provision postponing its application to union health plans until 2018. Labor leaders said that transition time was needed to accommodate unions and employers with multiyear agreements.

But Antonia Ferrier, a spokeswoman of House Republican Leader John Boehner of Ohio, said: "This union kickback is the latest in a long line of back room payoffs and sweetheart deals on a healthcare bill that the American people overwhelmingly do not support. A lot of people across the country will be angry, and who can blame them."
[link to www.latimes.com]