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November 6, 2015 | NORTHWEST LABOR PRESS
... Rare bipartisan agreement to kill Obamacare’s ‘Cadillac tax’
From Page 1
ices. It’s an argument that ap-
peals to health policy wonks …
and Ivy League-trained econo-
mists working for the White
House.
Out in the real world, workers
with employer-provided cover-
age are already paying higher
deductibles and co-pays than
ever. Deductibles have gone up
by about $100 a year since Oba-
macare passed in 2010. And any
employer spending heavily on
health benefits has already tried
to put a lid on costs.
Obamacare’s Cadillac tax
will start on any employer
health expenditures above
$10,200 a year for single cover-
age and $27,000 for family cov-
erage. Those amounts include
the total insurance premium, re-
gardless of who pays it, plus any
employer contribution to a
Health Savings Account.
The Cadillac tax may in fact
stop employers from spending
above those limits, but employ-
ers will accomplish that by shift-
ing the burden to workers. The
number one way employers can
reduce premiums is by increas-
ing deductibles, co-pays and
coinsurance paid by workers.
Union employers can’t wait
until 2018 to deal with it. They
pay for health benefits under
multi-year union contracts that
are already being negotiated.
How to avoid the Cadillac tax
was a big factor in the tough
bargaining that nearly led to a
Longshore West Coast port
shutdown. In Longview, Wash-
ington, 800 paper mill workers
struck for 12 days last month af-
ter their employer, Kapstone,
imposed health benefit cuts in
the name of avoiding the tax.
But the Obama Administra-
tion appears to be standing firm
in defense of the Cadillac tax.
Jason Furman, chair of the
White House Council of Eco-
nomic Advisers, defended the
Cadillac tax in an Oct. 7 speech
at the Brookings Institution
think tank, saying it will not
only reduce health care costs
and lower future federal deficits,
but even boost workers’ wages
and lead to more jobs.
“Economic theory im-
plies that the money
employers save on
health benefit costs as a
result of the tax will be
passed through to work-
ers as higher wages.”
—Jason Furman, Obama’s
top economic adviser
“Economic theory implies
that the money employers save
on health benefit costs as a re-
sult of the tax will be passed
through to workers as higher
wages in the long run,” said Fur-
man—a Harvard-educated
multi-millionaire and son of a
wealthy New York real estate in-
vestor. Of course, economic the-
ory also predicts higher wages
as unemployment drops, and
that’s not happening either.
Kaiser Family Foundation
CEO Drew Altman, in an Oct. 2
Wall Street Journal op-ed, pre-
dicts that the Cadillac tax will
hit low-income workers and the
chronically ill hardest — be-
cause it will cause employers to
increase deductibles and co-
pays. And actuaries from the
consulting firm Milliman proj-
ect that the tax will unfairly im-
pact employers that happen to
have lots of older workers, or
that are located in the areas with
the highest-price health care,
like the Northeastern United
States. One recent Milliman
study reported that nearly 70
percent of variance in health in-
surance premiums is explained
by geographic location, while
just 6 percent is due to the com-
prehensiveness of the benefits.
But AFL-CIO legislative rep-
resentative Tom Leibfried points
to signs that the Cadillac tax is
losing support. Democratic
presidential candidates Bernie
Sanders and Hillary Clinton are
in favor of repeal. So is Repub-
lican presidential candidate —
and newly installed House
Speaker—Paul Ryan. And at
least three pending bills in Con-
gress would repeal it. A bill
sponsored by U.S. Rep. Joe
Courtney (D-CT), has 167 co-
sponsors, including 20 Republi-
cans [In Oregon, Peter DeFazio,
Suzanne Bonamici, and Greg
Walden are co-sponsors.]. The
“Ax the Tax on Middle Class
Americans’ Health Plans Act”
by U.S. Rep. Frank Guinta (R-
NH) has 106 cos-ponsors, all
Republicans. And in the Senate,
a bill by Sherrod Brown (D-
Ohio) to repeal the Cadillac tax
has 13 co-sponsors.
Congress is too dysfunctional
these days to pass stand-alone
bills, but Leibfried thinks the
proposal may gain traction as
part of a larger bill later this
year, such as a bill on “tax ex-
tenders.”
HOW TO ‘FIGHT THE 40 ‘
To pound the drums for repeal,
unions have joined with employer
groups and health care companies in
a coalition called Alliance to Fight the
40, behind the slogan, “Stop the 40
percent tax on health benefits.” For in-
formation about the campaign, and
sample letters you can send to mem-
bers of Congress, visit fightthe40.com.