WASHINGTON – A number of union leaders seem to be on the verge of dropping their opposition to the U.S. Senate’s version of health care reform legislation, after lengthy negotiations last week with the Obama Administration.

Union leaders have strenuously objected to a scheme for paying for expanding health care by imposing a surtax on so-called “Cadillac” health care plans, like those held by many union members.

But after those negotiations… that surtax still exists. According to the Wall Street Journal, under an agreement forged by the Obama Administration, Democratic lawmakers and a number of union leaders, the surtax won’t kick in until 2018, five years after it starts for nonunion workers.

That agreement lines up with the Senate’s version of health care reform, which taxes 40% of the value of workers’ health insurance above minimums of $8,500 yearly for an individual and $23,000 for a family, with annual increases pegged to the inflation rate.

AFL-CIO President Richard Trumka told reporters the final health care bill he expects to emerge will be “a milestone. We’ve been fighting for health care for over 60 years, and we are on the threshold of a significant achievement….But we don’t look at this as the end of the fight, but another step in the quest for real reform.”

Wrote IBEW General President Edwin Hill, in a Jan. 14 website statement to union members: “We believe that our efforts have yielded provisions that will allow health care reform to move forward while protecting the large body of middle-class Americans, both union members and those who do not belong to unions. The unions’ talks with the administration reduced the impact of the excise tax on the middle class by a cumulative total of $60 billion.”

Paying for health care coverage for tens of millions of uninsured Americans has become a contentious issue – not only among Democrats and Republicans (who overwhelmingly don’t want anything to do with these health insurance reforms) – but among Democrats.

Some plans for revenue to offset the added costs include raising taxes on the rich, and increasing the taxes on medical device makers, nursing homes and drug manufacturers. They may or may not be included in the final plan, which must be agreed to by House and Senate negotiators. Both the House and Senate have agreed to different health-care-for-all blueprints. But this plan, now with the proposed built-in advantage for union plans, is drawing howls of protest from a number of corners.

“The White House and Congressional Democrats are picking one group of workers over another,” said Antonia Ferrier, spokesman for House Minority Leader John Boehner (R-Ohio) to the Wall Street Journal. “If this sounds discriminatory, well, it is.”

Michael Whitney, a progressive blogger, wrote on the AFl-CIO website: “If unions take this deal, it’s a sell-out of epic proportions. I’m hard pressed to think of a deal unions could cut in health care that would cause more long-term damage to not just the credibility of the labor movement, but to the middle class itself.

“The excise tax is a tax on more expensive insurance plans that is supposed to fund part of health care reform. It was branded the ‘Cadillac tax,’ but that distorts the reality of who it will affect. This isn’t a tax on the rich; it’s a tax on the middle class, the old, and the sick with more expensive plans. And a good chunk of those plans are negotiated under collective bargaining agreements, i.e. under union contracts.”

The separate bills passed by the House and Senate would both extend coverage to more than 30 million uninsured Americans. The price tag would be about $1 trillion. Under both plans would be a requirement for almost everyone to carry health insurance. Employers would also be unable to prohibit insurance companies from denying coverage because of pre-existing medical conditions. Lower-income people would get subsidies to help them buy insurance.

“We are on the doorstep of accomplishing something that Washington has been talking about since Teddy Roosevelt was president, and that is reforming health care and health insurance here in America,” Obama told rank-and-file House Democrats on Jan. 14 during a visit to the Capitol.

Union leaders met with Obama officials twice last week in the effort to get a plan both sides could live with. The Fire Fighters and the Machinists, who were not in the talks, stayed opposed to taxing health care for Cadillac plans even as the AFL-CIO and other unions agreed to the tax, with the five-year delay. Numerous other unions had not issued statements on the matter.

Fire Fighters President Harold Schaitberger called Obama’s support of taxing health insurance benefits, “a huge disappointment” that “cannot be ignored,” as it breaks Obama’s campaign promise not to do so.  “If President Obama continues to support it and signs a bill that includes the excise tax on workers, we will hold him accountable,” he said.