This commentary was originally featured in The Monitor on September 25, 2017.
Remember when President Barack Obama said that passage of the Affordable Care Act would save middle class families $2,500 a year on their health insurance premiums? Obama claimed much of that savings would come from taxing so-called “Cadillac plans” that gave the rich “overly generous” benefits, and using that windfall to help fund Obamacare.
Well, as we’ve seen, premiums have skyrocketed around the country, only nominally more people are insured, and it has become clear that a “Cadillac plan” is a misnomer and aren’t only the purview of the rich and generously insured. The same middle-class Americans Obama claimed the ACA would help are the very people who will end up being hit by the 40 percent tax on employer-sponsored health care coverage.
The “Cadillac tax” is an onerous 40 percent tax assessed on employer-sponsored health insurance plans valued at more than $10,800 for individual coverage and $29,100 for family coverage in 2020. These threshold amounts include the costs of the very programs that employers use to help control costs and keep their workers healthy — like on-site medical clinics and wellness programs. Any businesses providing their employees with insurance valued over those modest thresholds will be hit with the staggering tax, increasing their costs for each employee by more than $8,000 per year.
Congress can’t tax its way out of our country’s healthcare problem. Millions of lower- and middle-class Americans are now on plans that exceed that limit and they face a massive tax burden that was initially billed as hitting just the wealthiest Americans.
In fact, the people who will likely be harmed most by a “Cadillac tax” are the working-class engaged in high-risk professions, such as steelworkers, police officers, coal miners and construction jobs. These hard-working Americans need and deserve extensive health insurance coverage, but the “Cadillac tax” will reduce their benefits and cause their plans to become prohibitively expensive.
In Texas, more than 13 million people could be subject to the “Cadillac tax” — nearly half of the state’s residents. Nationwide, as many as 177 million Americans could be taxed.
When they passed the so-called “Cadillac tax,” President Obama and Democrats in Congress apparently didn’t consider that “high-cost insurance plans” aren’t the same as “wealthy people’s insurance plans.” It should really be called the “pickup truck drivers’ tax” or the “minivan mom tax,” since the tax is more likely to harm blue collar workers than old rich guys driving Cadillacs.
Health insurance plans can be expensive for a number of reasons. Americans in rural areas, for example, often pay far more for health care. People can also face high health insurance costs due to an accident or a chronic illness, or because they share an insurance pool with people who use more health care services, driving up insurance costs for everyone.
Two things are already happening by virtue of the impending roll out of this awful tax:
>> Employers are being forced to cut benefits to avoid triggering the tax.
>> Employers are shifting more costs onto workers in the form of higher deductibles and out-of-pocket costs, which forces many to avoid seeing the doctor because it is more expensive under these skimpier plans. This means more sick people and lower productivity in the work force.
Many lives have been saved across the country because employers offer affordable, high-quality health coverage and develop innovative programs to help workers stay healthy and better-manage chronic conditions. But those stories will become less common if a tax on employer-sponsored health insurance is allowed to go into effect. Fewer families will be able to afford their employer-sponsored coverage and the pricey deductibles, and may be forced to forgo care.
Congress should turn its attention to saving Americans from the dreaded and misnamed “Cadillac tax” and protecting employer-sponsored health coverage before it is too late.