Taxing 'Cadillac' Health Plans Has Widespread Effects

Source: NPR

Mr. Obama, in an interview with PBS's Jim Lehrer, was referring to the kind of health insurance that's offered to top officials at the Wall Street bank Goldman Sachs. Massachusetts Democratic Sen. John Kerry has proposed taxing insurance companies when they offer these expensive plans.

..


"It's probably not just rich people," says Len Burman, an economist who runs the Tax Policy Center at the Urban Institute. "Actually, government employees get really generous health insurance plans, unionized employees can get very generous health insurance plans."




Read more: http://www.npr.org/templates/story/story.php?storyId=111339166

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Bingo. They couldn't dare tax the rich, so busting unions and the rest of the middle class who still have good jobs was the only place left. Despicable.

...and I'm against the practice, regardless of definition. I don't see the value in penalizing people for being responsible.

to keep good insurance, aka Cadillac, are punished. It's outrageous.

It is, in effect, capping the deduction, for plans about twice as expensive as the average plan.

Just increase taxes on income from households that take in 350 grand or more a year and get on with the health plan.

That's a tiny fraction of American households. Repeat this fact often.

Oh, and tax Freepers and make them gay marry.

...the Swiss bank.

Why is the IRS pussyfooting around with these accounts? I think it outrageous that we have GOPers and Blue Dog Dems holding up health-care overhaul because of costs when we have this many tax cheats in just one bank!

How many unionized workers or otherwise middle class people have a healthcare plan worth $40,000+ a year?

:rofl:

It would be especially cogent coming from one of the NPR/Fox News "reporters."

apparently couldn't find one. The one they sited (without saying it would not be impacted) was a NH one that was $20,400.
http://www.time.com/time/politics/article/0,8599,1913147,00.html?iid=tsmodule

tax on income? Why tax benefits?

this tax increase will have, which I doubt, here are some sources.

Our findings contradict the unsubstantiated, often repeated claim that those with exceptionally generous “Cadillac” plans are the biggest winners under the current tax treatment. For plans with the same generosity, we find that key factors in determining who would be affected by making these benefits taxable are age of workers and size of firm. Individuals with mostly older co-workers or those who work at small firms are substantially more likely to pay a lot for health insurance.

Workers’ health risks and small firms’ higher administrative costs and inability to effectively pool risks play an important role in determining who has high health insurance premiums. Therefore, in contrast to what is suggested in the public discourse, enrollees in firms with these characteristics stand to lose the most from a change in the tax treatment of premiums. In addition, if the value at which the cap is set is indexed to overall inflation and not to the faster inflation rate of health care premiums, the number of people affected can easily double over the next 10 years.

Our paper offers an important contribution to the debate that is developing over this approach because it highlights, for the first time, the distributional impact of limiting the tax preference. To date, no one has characterized the population which actually enrolls in relatively costly employer plans even though the vast majority of premiums paid for employment-based health insurance are untaxed. That said, our research is only one piece of the puzzle. Reducing the tax exclusion would likely accelerate the erosion in employer-sponsored insurance that has occurred since 2000, particularly for small firms who are most sensitive to price changes. There would be hurdles to overcome in administering such a policy as well.


http://www.epi.org/publications/entry/Cadillac_health_care_benefits_arent_always_what_they_seem/


http://articles.moneycentral.msn.com/Insurance/InsureYourHealth/what-a-tax-on-health-benefits-may-mean.aspx

Sounds like a very thorough analysis...

:eyes:

if balanced with a tax write-off for health insurance up to a capped limit. It really is hidden income. Those who are not government employees don't have that perk and we have to use our income to pay for health insurance. Are we not middle class?

Not to mention, those of us without gold plated plans pay for some of the co-pays and other costs which those plans pay, with after tax money.

One precedent is that there is a cap on the cost of life insurance a company can give employees without declaring it as income to the employee.

750 deductible and 90% pay. my pay was 8.50 and 20 % of that went to paying my insurance. so would qualify for a Cadillac or a Buick?

The misrepresentation on this issue is stunning, its amazing how few people here fail to understand that this tax increase will impact them. It would be fine, except that the transfer is back to the insurance companies, not for real coverage for more Americans.

A person making $8.50/hr or even $50/hr probably isn't going to have one of those plans.

Goldman Sachs executives and leave union workers benefits alone.

The taxes the Goldman types will pay is lunch money to them, it will really matter to the rest of those hurt by this increase. You are flatly wrong that this is a tax on the rich.

If I interpret your numbers correctly, I don't think it will be even close. It is highly unlikely that your employer is paying over $20,000 the amount needed in addition to your contributions.

(20% of your pay is steep! I wonder how the subsidies will work in cases like yours - that is a huge amount to pay.)

It may have started out that way, but with so many give backs just to keep a job, it is no longer that way. We can only afford to go to the doctors in an emergency, not because we "should" for whatever reason. We no longer have dental or vision at all.

speaking of people who would lose family farms and small business. Now, no one EVER found an example of a farm being sold due to the estate tax. The people who benefited from that repeal were the very rich. Here, this is a Bill Bradley idea, resurrected by Senator Kerry. Both are strong liberals.

This is not quite as black and white, but it is similar.

The fact is that this tax is only on the portion of plans above some threshold that will be between $25,000 and $40,000. Now, when TIME raised the same issue here - the union plan they pointed to was $20,400, below the threshold. This is an attempt to lower the support overall for the health care bill.

Here is something I wrote yesterday, pulling in the articles I could find.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=132&topic_id=8557856&mesg_id=8559167

and it's going through with barely a whimper.

their OWN "cadillac" healthcare plans? What do you think the answer to that will be Hmmmmm!

That's a cadillac, that's gold plated health care, that's high end: $5,000 a month.

That was about twenty years ago. I can only imagine both are higher now.

Tax 'em. It's ridiculous that it is not taxed as extra income. When I had to pay for my insurance with pre-tax dollars, why shouldn't they?