A coalition of congressmen and leaders of federal employe unions vowed yesterday to fight a new Medicare tax passed by key Senate and House committees that would cost federal employes in high pay grades as much as $450 next year.
The group charged that the 1.3 percent tax, billed as a revenue-raising measure, would end up costing the federal government more than it brings in and would further erode what many see as an already inadequate pay increase proposed for federal workers in 1983. Passage of the tax, according to one union official, is tantamount to "pouring salt on the government workers' wounds."
"We hope to have it brought up again in committee so we can deal with it for what it really is--a tax increase," said Rep. Robert Matsui (D-Calif.), a member of the Ways and Means Committee, which last week approved the measure on a voice vote. "We will continue the fight all the way to the president's desk if need be."
But the measure's sponsor, Rep. Willis Gradison (R-Ohio), said he would oppose a second vote on the measure, which he sees as "a simple matter of equity" that forces government workers to pay for Medicare benefits that many are already getting for little or no money.
Gradison asserted that the tax will indeed bring in new revenues and help to shore up the financially troubled Medicare trust fund. The Congressional Budget Office has estimated that the tax would add about $617 million in new revenues in the coming fiscal year.
Rep. Michael Barnes (D-Md.), who is chairman of the Federal Government Service Task Force, argued that the tax would further erode the meager 4 percent pay increase that workers have been promised for next year. The 1.3 percent tax would cut the pay raise to 2.7 percent, helping to widen the broad gap that already exists between salaries in the private and public sector, Barnes said.
Federal workers currently pay premiums into privately run health benefit plans and can extend their coverage into retirement by continuing those payments. Payments for Medicare, the federal government's health care program for the elderly, are not taken from their paychecks. Employes in the private sector, however, have 1.3 percent of their salaries taken for Medicare. Anyone who pays in for 10 years is eligible for coverage.
Opponents of the new tax charge that it would result in "double taxation" for federal workers and add millions of new recipients to the already troubled Medicare program, possibly doing more financial harm than good. Government costs under the Medicare plan are higher than under the private plans now used by federal workers, they argued.
But Gradison said that a majority of federal workers currently take advantage of Medicare coverage, although they pay little or nothing into the system. Federal workers who either have worked previously in the private sector or hold down second jobs there or whose spouses are privately employed are eligible for the program. "Most of them are getting the benefits anyway," said Gradison, pointing to CBO estimates that 70 percent of federal retirees use Medicare. "This new tax is just to make sure they pay for it."