The Cadillac Tax & Attacks On Workers Healthcare

Date and Time:
Saturday, October 31, 10:45AM-11:45AM

Presenter & Facilitator: Jim McGee, Transit Employees Health and Welfare Plan

Description: The so-called Cadillac tax—a 40% excise tax on employee health benefit spending in excess of certain caps—is due to be implemented in 2018 and is already having a devastating impact on employment-based healthcare benefits and union bargaining prospects. This workshop will explore the flawed assumptions that the tax is based on, its potential impact on workers and their families and the growing efforts to repeal it and will debate how the single-payer movement should relate to those efforts.

Notes from Conference Participants:

Jim McGee:

  1. 40% excise tax on $ above threshold
  2. removes tax deductibility

After 2018, indexed to CPI -> problematic because medical inflation higher than all inflation. No adjustments for age or geography. "Cost" evaluates premiums (total), HSAs, and PSAs.

Employees also have to pay additional corporate income tax.

All plans will be above the threshold at some point (if meeting minimum ACA value)

Not clear if will be able to calculate tax into ratings for TPA plans.

Government assumes lower cost plans will = higher wages

Higher employee premiums does not equal lower tax

Why flawed? Assumptions:

  1. health benefits should be considered as wages
  2. consumers paying more = lower cost
  3. excise tax needed to fund Affordable Care Act

"Why wrong":

  1. healthcare is not earned -> tax deductions are for social positive externalities (pensions, education, etc)
  2. consumers don't try to get unnecessary services - preventive services not obtained - hip & knee surgeries not utilized
  3. CBO revenue estimates have declined, revenue assumes higher wages -> not going to be there

Alliance to Fight the 40:

Medicare supplement plans that pay cost-sharing may go away - supp. plans regulated by Medicare

Medicare cost trend has been flat

Biggest complication for employers: reporting obligations under ACA -> enforcement mechanism

Employers want defined-contribution health plans -> single payer

Maryland capped hospital revenue growth to growth of economy

Slideshows, Photos, and Video:

Download the Cadillac Tax presentation as a PDF file here, or click on the image for the PowerPoint presentation:

Health Affairs Policy Brief on the ACA Excise Tax

Chamber letter supporting HR 879

HR 2050

HR 879

On Chamber of Commerce opposition to the Cadillac Tax

Chamber letter supporting HR 879

Alliance to Fight the 40

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