Republicans and Unions Fight Obamacare Tax

The tax on “Cadillac” plans is being opposed by both Republicans and unions.

According to the Washington Times, “Obamacare ‘Cadillac tax’ to hit 1 in 4 employers that offer health care benefits.”

Obamacare’s “Cadillac tax” will hit one in four employers that offer health care benefits, a leading industry analyst says in a report being released Tuesday, socking companies with a massive levy that Republicans and Democrats on Capitol Hill say is unfair to those who have negotiated high-quality plans as part of their jobs.

The Kaiser Family Foundation estimates that 26 percent of companies will be affected by the tax when it takes effect in 2018 and 42 percent of employers will be paying the levy a decade later, signaling just how quickly health care costs are expected to rise — and how valuable the Cadillac plans are.

Kaiser said some employers probably will cut back on the scope of their plans to duck the tax, resulting in coverage with higher deductibles or networks with fewer doctors.

“For the most part, these changes will result in employees paying for a greater share of their health care out-of-pocket,” the study authors wrote.

The tax is a whopping forty percent. It is a completely Democrat idea just like the rest of Obamacare. They wanted it because it was the only way to “pay for” other Obamacare giveaways.

The tax rate of 40 percent is relatively high to what employees would pay if the benefits were taxed like regular compensation, and the employers cannot deduct the tax payments as “a cost of doing business.”

In other words, this tax is really a higher income tax.

[See also, “Obamacare Stimulates the Regulation of Personal Trainers.”]

Unions hate it too.

Labor unions, which generally back Democrats, have balked at the tax. They say they often negotiate for better health care plans instead of higher wages and now will have to grapple with benefit cuts because of government pressure.

“Even though the tax won’t go into effect until 2018, employers already are slashing benefits in anticipation of it, forcing millions of families to become seriously underinsured. This is possibly the ACA’s most dangerous trend,” said an op-ed this month in The Hill newspaper written by three union presidents: Randi Weingarten of the American Federation of Teachers, Lee Saunders of the American Federation of State, County and Municipal Employees, and D. Taylor of the hospitality workers union Unite Here.

The only good news here is that this tax might become a part of the Presidential campaign. What bothers me is that Republicans promising to “fix” it are accepting the idea that rationing is necessary:

Mindful of economists’ warnings about the overuse of health care, Mr. Hatch, Sen. Richard Burr of North Carolina and Rep. Fred Upton of Michigan offered a Republican alternative to Obamacare in February that caps the tax exclusion of job-based health insurance at $12,000 for an individual and $30,000 for a family.

“Unlike the punitive Cadillac Plan Tax in current law which imposes an onerous excise tax of 40 percent on cost of coverage of health plans that exceed the annual limit, our proposal treats every additional dollar after the generous threshold at the individual’s tax rate — a more balanced approach for middle class Americans,” their blueprint says.

I don’t want a more balanced approach. I want the law destroyed.