At Work

Cadillac tax not popular… duh!

Implementation of the Obamacare so-called Cadillac tax on the value of health plans has not gone away,  it has just been delayed until 2020. This hasn’t stopped employers from lowering the value of their plans now in anticipation of the tax which no employer in its right mind will pay (government plans the likely exception).

The tax is supposed to provide the government with income to offset the cost of Obamacare in several ways, the tax itself, lower health benefit tax deductions for employers and higher income taxes from workers on the absurd theory that as employers reduce benefits to avoid the tax wages will be increased. 

If the tax is ever implemented, one thing is clear. It is a tax and a burden aimed directly at the middle-class; at every worker who ends up with lower health coverage, higher out of pocket costs and NO higher wages to offset either. Even in the unlikely event of higher offsetting pay, the worker will get to pay income and payroll taxes on that income. 

Source: American Benefits Council

The above results tend to reinforce my naive theory for the politic left. Only 52% of Democrats agree with the first statement when, for several years, employers have actually been reducing health benefits and have not been raising wages to offset the loss. 
Of course, we must ask the question, if the tax is repealed, where does the assumed revenue of $71 billion come from?


2 replies »

  1. You conclude: “Of course, we must ask the question, if the tax is repealed, where does the assumed revenue of $71 billion come from?”

    And, “of course”, no one cares – we’ll just run a larger deficit in the future because the PPACA coverage expansion (Medicaid and subsidized coverage in the public exchange) won’t be cut back – now that it is in place.

    Most importantly, who is keeping score, anyway? Remember the promise (Remarks by the President to a Joint Session of Congress on Health Care, September 9, 2009):

    “… Finally, let me discuss an issue that is a great concern to me, to members of this chamber, and to the public — and that’s how we pay for this plan.

    And here’s what you need to know. First, I will not sign a plan that adds one dime to our deficits — either now or in the future. I will not sign it if it adds one dime to the deficit, now or in the future, period. And to prove that I’m serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don’t materialize. Now, part of the reason I faced a trillion-dollar deficit when I walked in the door of the White House is because too many initiatives over the last decade were not paid for — from the Iraq war to tax breaks for the wealthy. I will not make that same mistake with health care.

    Second, we’ve estimated that most of this plan can be paid for by finding savings within the existing health care system, a system that is currently full of waste and abuse. Right now, too much of the hard-earned savings and tax dollars we spend on health care don’t make us any healthier. That’s not my judgment — it’s the judgment of medical professionals across this country. And this is also true when it comes to Medicare and Medicaid. …

    And that is why not a dollar of the Medicare trust fund will be used to pay for this plan. … The only thing this plan would eliminate is the hundreds of billions of dollars in waste and fraud, as well as unwarranted subsidies in Medicare that go to insurance companies — subsidies that do everything to pad their profits but don’t improve the care of seniors. And we will also create an independent commission of doctors and medical experts charged with identifying more waste in the years ahead. …”

    … Now, add it all up, and the plan I’m proposing will cost around $900 billion over 10 years — less than we have spent on the Iraq and Afghanistan wars, and less than the tax cuts for the wealthiest few Americans that Congress passed at the beginning of the previous administration. Now, most of these costs will be paid for with money already being spent — but spent badly — in the existing health care system. The plan will not add to our deficit. The middle class will realize greater security, not higher taxes. And if we are able to slow the growth of health care costs by just one-tenth of 1 percent each year — one-tenth of 1 percent — it will actually reduce the deficit by $4 trillion over the long term. …”

    In the middle of this speech, the President was interrupted by Congressman Joe Wilson, R-SC, who exclaimed “You lie.” He said that in response to the President’s assertion that PPACA would not extend coverage to illegal immigrants. However, the Congressman’s assertion rang true once the President pushed through his “deferred action” immigration executive order.

    Unfortunately, Congressman Wilson should have been asserting “you lie” at every phrase of the speech when the President asserted that it would be paid for, wouldn’t add a dime to the deficit, etc.

    Fortunately, or unfortunately, no one is keeping score. And, because some provisions of PPACA have been repealed, the D’s can claim that it would have been deficit neutral (and would have reduced the deficit by $4 trillion over the long term) had the R’s not meddled and changed the law.


    • Excellent post Benefit Jack. Unfortunately the only thing with a shorter shelf life than a politicians promise is the American public’s attention span.


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