This commentary was originally featured in the Dallas Morning News on September 10, 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 "Cadillac Plan" is a misnomer, and these plans 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.
This 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 employees with insurance valued higher than those modest thresholds will be hit with the staggering tax, increasing the company's costs for each employee by more than $8,000 per year.
Congress can't tax its way out of our health care problem. Millions of lower- and middle-class Americans are now on plans that exceed the limit and will be slapped with a massive tax burden initially billed as hitting just the wealthiest Americans.
In fact, the people harmed most by the Cadillac tax are workers engaged in high-risk professions, such as steelworkers, police officers, coal miners and construction workers. 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.
Here in Texas, more than 13 million people could be subject to this tax, nearly half of the state's residents. Nationwide, as many as 177 million Americans could be deprived of the quality insurance benefits they now receive from their employers.
When they passed the so-called Cadillac tax, Obama and Democrats in Congress apparently didn't consider that high-cost insurance plans aren't the same as wealthy people's insurance plans.
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 accident or 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 tax: Employers are being forced to cut benefits to avoid triggering the tax, and they are shifting more costs onto workers in the form of higher deductibles and out-of-pocket costs. This prompts many to avoid seeing their doctors 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 offered affordable, high-quality health coverage and developed innovative programs to help workers stay healthy and better-manage chronic conditions. Those stories will become less common if the 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 some 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.