Prospect of Health-Plan Tax Draws Union Opposition

The national teachers’ unions are nervously eyeing a provision in a Senate version of the health-care overhaul now working its way through Congress that they say could ultimately squeeze medical benefits for educators.

The language would tax insurance companies and plan administrators that offer what the measure defines as high-cost health coverage—often referred to as “Cadillac” or “gold-plated” plans—to help pay for the broader effort to expand access to health insurance while better controlling costs.

But many officials in organized labor, including teacher representatives, argue that a tax imposed on companies would likely be passed along to workers in the form of higher premiums or less comprehensive benefits. That would be unfair, they say, to workers who have given up higher pay in exchange for strong health benefits—a good description of a...