Obamacare "Cadillac Plan" Tax Used Against Unions In Contract Negotiations

What many of us opposed to the Obama health care plan warned about is now coming to fruition:

The so-called Cadillac tax was inserted into the Affordable Care Act at the advice of economists who argued that expensive health insurance with the employee bearing little cost made people insensitive to the cost of care. In public employment, though, where benefits are arrived at through bargaining with powerful unions, switching to cheaper plans will not be easy. 

Cities including New York and Boston, and school districts from Westchester County, N.Y., to Orange County, Calif., are warning unions that if they cannot figure out how to rein in health care costs now, the price when the tax goes into effect will be steep, threatening raises and even jobs.

“Every municipality with a generous health care plan is doing the math on this,” said J. D. Piro, a health care lawyer at a human resources consultancy, Aon Hewitt. 

But some prominent liberals express frustration at seeing the tax used against unions in negotiations.

“I think it was misguided all along,” Robert B. Reich, the former labor secretary, said in an e-mail. When the law was being written, he said, he worried that the tax was “a blunt instrument that could too easily become a bargaining chit for cutting back benefits of workers.” 

“Apparently, that’s what it’s become,” Mr. Reich, who is a professor of public policy at the University of California, Berkeley, said. 

Under the tax, plans that cost above a certain threshold in 2018 — $10,200 annually for individual plans and $27,500 for family plans, with slightly higher cutoffs for retirees and those in high-risk professions like law enforcement — will be taxed at 40 percent of their costs in excess of the limit. (The thresholds will rise with inflation after 2018.) 

State and local governments across the country tend to offer more expensive health plans than private businesses do, and workers often accept smaller wage increases to retain their benefits. Because of this, state and local government employees are expected to be disproportionately represented among those whose plans will be subject to the tax. 

New York City expects its two most popular employee health plans to reach taxable Cadillac levels by 2018 or shortly after. This year, the city projects that it will pay a total of $7,128 for individuals and $18,249 for families in its most popular plan, including the costs the city pays into union welfare funds to cover prescription drug benefits. That is above the national average for employer-sponsored health care coverage, which last year was $5,615 for single coverage and $15,745 for family coverage, according to a 2012 Kaiser Family Foundation survey. 

Expect to pay more for your health care in the very near future, perhaps the very next contract, and expect them to switch to cheaper plans that put more of the cost on you.

And all those years your union agreed to lower wage increases because of the "generous" health care benefit plan?

Well, you can forget about seeing that money ever again.

I was opposed to Obamacare from the beginning because this is what it was devised to do - increase costs on people with employer-provided health care plans to subsidize people without health care while maintaining the generous subsidies to the insurance industry by failing to provide a public option plan.

And remember, those without health care are now mandated to buy it or be penalized by the IRS, another infuriating part of the plan and another reason why I opposed it.

This excise tax does not have to go into effect, it can still be killed.

But because it is mostly aimed at union workers and government workers, the chances of it being done away with before 2018 are nil.