Reality of Taxing Cadillac Plans

Do you know how much your insurance plan costs?

(I ask the question because I have no idea if the tax would hit me or not, as I don't have a clue how much my plan actually costs my employer. I think some of the reasoning of this tax is so that people WOULD start to know.)

If you put a bunch of crabs in a pot they won't climb out because they will keep pulling any crab trying to get out back into it. 'Cadillac' insurance for everyone is what we need.

right now?

I thought annually Canada's cost per person was somewhere in the 4K range and the U.S. in the 8-10K range.

Since you mentioned Canada vs. US, I think this must be what you're trying to remember:



http://www.yesmagazine.org/issues/health-care-for-all/1503

Employers actually want this tax as an excuse to do exactly that.

So who pays if your flex plan pushes you over? The health plan gets dinged for the other coverage?

I have a good job and that puts me much better off than many, many people today. If I have to tighten my belt a little so some of those others can have even basic health insurance, how fucking selfish would I have to be to complain about that?

Oh right, garden variety every day "progressive" selfish, is all I'd have to be.


* note that "progressive" is in quotes for a reason.

It only affects the corporations that pay the tax.

Its not a tax on individuals, despite what the anti-healthcare reform people would have us believe.

but employers typically kick in half to 2/3rds, and in some cases 3/4ths of a plans' cost. Thus the "it varies widely" part.

If you have insurance through your employer, odds are that you are paying less than half the total premium cost.

What you get for what you pay also varies widely. It depends on the number of people in the risk pool, their relative risk based on calculations of their age, relative health, and on how good a deal the company can negotiate with the insurer. Really big companies self-insure, getting the best deal by putting up the money themselves and hiring an insurance company to manage the claims and negotiate the provider contracts, generally at a smaller fee than insurance companies take from their regular customers.

Some companies can get pretty good deals. Other companies can get terrible deals. The same quality of plan may cost 2 or 3 times as much depending on who is buying it.

So, using the cost of a plan as the basis of the tax only sort of makes sense. Yes, it would encourage plans that cost less so they don't fall under the tax ... but they will do that by offering fewer benefits, not by deciding to take less profit. If employers cut benefits packages, they will not increase salaries to make up for the shortfall.

If the goal of the tax is to raise money to cover the cost of subsidies for the uninsured, it will fail to raise enough money to cover the subsidies.

I'm a progressive. I am more than willing to pay a tax on my income that would go to providing actual health care for everyone in this country. I cannot support a tax that will make health benefits worse, target the wrong people and yet fail to raise funds, and go toward purchasing over-priced insurance that does not actually provide a single person with health care. As a good old American consumer, I simply cannot support such a bad deal. And as a Democrat, I see this as political suicide.

You say that "Some companies can get pretty good deals. Other companies can get terrible deals. The same quality of plan may cost 2 or 3 times as much depending on who is buying it."
Yet at the same time you make the claim that taxing high-cost plans will necessarily "make health benefits worse."

That's the point: high-cost plans do not necessarily provide better benefits. Sometimes they do, but sometimes they don't. Many studies by health economists have shown that the correlation between cost and benefits of these plans is not evident. Getting employers to buy more efficient plans is what will help to bend the cost curve on health spending in this country over the long term. Taxing the rich is great, and I think we should do it--but it does nothing to contain costs on the health system in this country. That is why most health economists support the strong medicine of this excise tax.

As far as companies that face higher costs for plans because their workers are older or because they are involved in high-risk jobs, that has already been addressed in this bill: the threshold for taxing them will be higher.

And who is selling these "more efficient plans," because I would love to go to that store and get one.

Employers don't go to an insurance company and say, "hey I want you to really overcharge me for a modest package of benefits" they try to get the best deal they can.

This tax penalizes those who can't get a good deal.

That is why they will start to be able to purchase insurance for their employees on the exchanges, where they should be able to get a much better deal because of the larger pool. I'd like to see the size of small businesses able to participate in the exchange system expanded--but I believe that will happen if it is successful for the companies with fewer than 50 employees.

less than 21K is not taxed?

I wonder if on a 22K plan you would pay a 400$ tax. Which would be 1.8% of the total spend?

Anyway it just seems to me that there are way too many unknowns for people to be saying yay or nay to this. Get the facts out there and then we can really talk about it.

So you are correct: if the plan cost $1,000 more, the tax would be 40% of the amount over the 21K (26K for older or high-risk workers). So, $400.

if it is only a tax that impacts a very small number of people, and it is only a tax on a portion of the benefits package -- because I keep being told not to worry about it affecting me -- how would this tax actually do the two things it is supposed to do: raise money to pay for subsidies and bend the cost curve?

If the argument is that we shouldn't worry about it because it's not big enough to have the negative impact we fear, how can it possibly have the good impact it is supposed to achieve?

As a political move, it is obviously unpopular, and it targets a key Democratic voting block.

What I see is something that at best will be perhaps modestly effective. At best, modestly effective, with great political cost.

And more likely, it will manage to be both unpopular and ineffective.

How is fighting for the cadillac tax worthwhile?

FDR is rolling over in his grave at what Obama & Democrats, Inc. is doing.

Reagan and the right wing have done their work well. Union membership is down from 36% at its highest to 8% now. So, let's deal the death blows to them. Union workers with decent health care benefits have become the new welfare queens.

This doesn't do anything to break up a union... But it does harm union members.

What it may "bust" is union support for the DNC.

And with the way things are nowadays, it amounts to another damaging blow for unions to overcome, just to compete in the job-force.

Instead of a slap in the face, I would say it's more like a sucker punch to the face from the side.

I hope when Obama meets with the unions, they inform him that they have had it and will be jerking all money, support, and their help with GOTV from any Democrat, including him, that votes to tax their benefits to pay for his giveaway to the Insurance Industry.

By the way, my girlfriend lives in Winston-Salem and the Old Salem Museum is awesome.

It's like our own mini-Williamsburg (where we're also members) right in our back yard.

I agree with your take, though I'm not sure that any move toward a single-payer system woudl provide better healthcare than many unions also enjoy (that's another discussion).

I was just commenting on the union-<B>busting</b> part of the post. If anything, this could make the union stronger (as they unite against things that could hurt them). The problem is that to the extent this unites them, it against us. And that worries me.

Though with the way I've felt about the DNC of late, I'm not sure that "us" shouldn't be worried about my support. :(

Its ONLY paid by the corporations.

Corporations have much more power to resist price increases and will use the power to avoid the tax by putting downward pressure on health cost increases.

This is a good thing. Its exactly the kind of chess moves we elected Obama to make.

It's very clear you have no idea what the Hell you are talking about and you have failed to recognize that President Barack Obama, Democrat, is fucking unions all over the country. FDR is rolling over in his grave. I guessing you don't know too much about unions and what they do for the Democratic Party either, since you think this is such a good game Obama is "playing."

My Union Health & Welfare is $7.40 per hour worked contributed by the contractor to my Union Health & Welfare Fund, which puts me over their 'Cadillac' rate they are going to tax. Your idiot Multidimensional Chess Player is jamming it up my ass, by taxing me to pay for his fucking giveaway to the Insurance Industry, instead of going with the House of Reps bill to tax those making over $500,000 per year. And not that it makes a fucking difference to you, but my contractor has to compete with non-union contractors who do not pay for their employees health care and they pocket the difference when they win bids and they win a lot of bids. I only got to averaged 19.5 hours per week for all of 2009, until September, and have been without any work since then. Nothing was contributed for my alleged 'Cadillac' plan, so I lost my insurance coverage on New Year's Day.

By STEVEN GREENHOUSE
Published: January 8, 2010

When millions of blue-collar workers were leaning toward John McCain during the 2008 campaign, labor unions moved many of them into Barack Obama’s column by repeatedly hammering one theme: Mr. McCain wanted to tax their health benefits.

But now labor leaders are fuming that President Obama has endorsed a tax on high-priced, employer-sponsored health insurance policies as a way to help cover the cost of health care reform. And as Senate and House leaders seek to negotiate a final health care bill, unions are pushing mightily to have that tax dropped from the legislation. Or at the very least, they want the price threshold raised so that the tax would affect fewer workers.

-snip-

In recent days, labor’s strategy has become clear. Unions are urging their members to flood their representatives with e-mail messages and phone calls in the hope that the House will stand fast and reject the tax. The A.F.L.-C.I.O., a federation of nine million union members, has declared next Wednesday “National Call-In Day” asking workers to call their lawmakers to urge them not to tax health benefits. The International Brotherhood of Teamsters is urging members to tell their representatives that “such a tax is simply a massive middle-class tax hike that this nation’s working families should not be forced to endure.”

Many Democrats fear that enacting the tax will hurt their re-election chances.

“This would really have a negative impact on the Democratic base,” said Representative Joe Courtney, Democrat of Connecticut, who has enlisted 190 House Democrats to sign a letter opposing the tax. “As far as the message goes, it’s a real toughie to defend.”

While union leaders would prefer killing the tax, some say privately that they could live with it if the threshold is lifted to $27,000, say, or $30,000. They argue that many insurance policies above $23,000 are typical of the coverage in high-cost areas like New York or Boston, or policies that cover small businesses or employers with older workers.

According to a union survey, one in four members would be hit by a $23,000 threshold, but only one in 14 if the threshold were raised to $27,000.

White House officials, however, voice concern that raising the threshold that much would lose $50 billion of the $149 billion in revenue that the tax is expected to generate over 10 years.

-snip-

Obama's plan here is to tax the corporations.

Somebody has to pay.

You should be thanking Obama that it will be the corporations instead of you.

Who fucking told you this?

Who told you that YOU would be taxed?

My guess is that was some Republican spreading FUD

Do some reading please. Its an excise tax

You do know how unions operate don't you?

Your membership in a union has no bearing on whether this legislation is good for the country.

You will benefit just as much as non-union folks.

This tax will not be paid by unions. It will be paid by big corporations. By employers.

Rest easy.

its a good thing, supported by Obama, Kerry and hundreds of other Democrats in the Senate.

You did not read the part about my membership in the union, otherwise you would clearly see how it TAXES me, unless you really do not know how union contracts with companies work. The bottom line is that your Messiah Obama is taxing union members to pay for his GIFT to the Insurance Industry.

You also NEED to EDUCATE YOURSELF, because there are NOT 'hundreds of other Democrats' supporting this in the SENATE!

How did you like the response you got for your alleged 'Republican' spreading stuff around?

Are you Progressive or DLC?

So what really made you join the DU?

On a side note: 2008 seems to be the year for the Obama Pom Pom Squad joining the DU. Not pointing fingers, just pointing out what is common about Obama supporters.

http://en.wikipedia.org/wiki/Excise_tax

Yes. I am "guilty" of being an Obama supporter. The majority of America is in fact if you look at election returns...not to mention recent polling data.

The question is. Why aren't you?

Good luck after Obama's HCR/DLC SHIT Bill, because the unions just might feel like their GOTV efforts were for a big shitburger from Obama. Re-read the post I made earlier, with regards to your stupid fucking definition... Think about it for a long time until the fucking light bulb comes on in your head.

DLC = Republican
2008?

I'm sick of looking at ignorant Pom Poms and I'm tired of wasting time on ignorance.

Rep. Raul Grijalva (D-AZ), a leading House progressive says if the White House can throw its weight behind a controversial tax in the Senate health care bill, it can stand up for some of the House's priorities, too....

Noting that the President stands foursquare behind the Senate's proposal to tax so-called "Cadillac" insurance policies to raise money, Grijalva put it to him to weigh in on some of the House's priorities. "How do you weigh in on a national exchange? How do you weigh in on a public option? How do you weigh in on the anti-trust exemption?"...

"Watching the fight is not enough," Grijalva said. "The pressure shifts to the White House now."...

House Progressive Caucus Co-Chair Raul Grijalva (D-AZ) has a number of issues with President Obama. But chief among them seems to be that, though they've stayed silent on a whole host of health care issues, they've thrown their weight behind a controversial tax in the Senate bill--one that Grijalva says violates Obama's solemn campaign pledge not to raise taxes on the middle class.

I asked Grijalva whether the White House's support for the Senate health care bill's excise tax on so-called "Cadillac" insurance policies is compatible with his promise on the campaign.

"No, it's not."

This is very dangerous territory for the White House. When you have a Democratic congressman saying that the President is advocating raising taxes on the middle class, that's fodder for campaign commercials against every member of Congress who votes for the health care bill, and against the President himself.

Go back and trying reading that post again. Never mentioned his name.

I respect that GRijalva is against this. But GRijalva is wrong and Obama is right.

The only thing you are doing is obfuscating and cheer leading for the HCR/DLC SHIT Bill.

RAH! RAH! RAHM!

When did you enter the workforce again?

Wel crafted fud get repeated by the other side. Sometimes it gets repeated by folks with the best of intentions.

RAH! RAH! RAHM!

Rep. Raul Grijalva (D-AZ), a leading House progressive says if the White House can throw its weight behind a controversial tax in the Senate health care bill, it can stand up for some of the House's priorities, too....

Noting that the President stands foursquare behind the Senate's proposal to tax so-called "Cadillac" insurance policies to raise money, Grijalva put it to him to weigh in on some of the House's priorities. "How do you weigh in on a national exchange? How do you weigh in on a public option? How do you weigh in on the anti-trust exemption?"...

"Watching the fight is not enough," Grijalva said. "The pressure shifts to the White House now."...

House Progressive Caucus Co-Chair Raul Grijalva (D-AZ) has a number of issues with President Obama. But chief among them seems to be that, though they've stayed silent on a whole host of health care issues, they've thrown their weight behind a controversial tax in the Senate bill--one that Grijalva says violates Obama's solemn campaign pledge not to raise taxes on the middle class.

I asked Grijalva whether the White House's support for the Senate health care bill's excise tax on so-called "Cadillac" insurance policies is compatible with his promise on the campaign.

"No, it's not."

This is very dangerous territory for the White House. When you have a Democratic congressman saying that the President is advocating raising taxes on the middle class, that's fodder for campaign commercials against every member of Congress who votes for the health care bill, and against the President himself.

How many years in the workforce have you got anyway?

http://www.youtube.com/user/davidsirota#p/u/0/MRNx-F8vRmM

Too bad that guy isn't president.

Either through increased tax bills or higher inflation. That how it works...always.

Insurers will not carry plans that will cause them to eat 40% taxes and if too many customers have such plans and the cost ratio rules actually work then they couldn't possibly stay within it. So, what will happen is they will slash comprehensive plans toward the basement coverage allowed (again, if that works) and shift more of the cost to the consumers to make sure they don't get hosed.

If you like this tax then you like less benefits and higher out of pocket expenses. Nothing is as ill as the smarter consumer of health care concept this is supposed to reinforce, I am not a doctor, I do not play one on TV, what I want and need is the person with the training and making the big bucks to do is first help me to stay healthy and catch problems early if possible, diagnose problems that arise, and get me the most effective treatment possible. I can make common sense assessments but in the end Mr or Ms Six Figures is supposed to have the plan of action.

The goal is quality, accessible, and affordable health care for all and this runs contrary to the very idea. Its another "free market" scam to rob the people, not help them. When you scheme and plan without thinking of the people they always get hosed ten times over. This is wonkish Frankenstein monster bullshit and free market economics not health care reform and the kind of cost containment that you get when you refuse to effect real systemic change while protecting profits, the pennies of the wealthy, and the employer stranglehold.

Sometimes one must accept they have failed and will have to fight another day. Claiming victory doesn't make it so. We have failed to be able to pass real comprehensive health care reform again and there is no sense in passing a status quo protection racket and pretending that even a step toward the goal was made. That or remind the right wing of the party that when the bloodbath comes they'll be the first to take the hits. We lose power but they lose their seats.

House bill without a public option and minus Stupek an thats the final offer, otherwise see you in Hell. If that's too "liberal" and "uncompromising" then we'll just have to be that way. I think not only the left but the broad majority of the party have come a few lightyears past meeting whoever the fuck we are begging for crumbs from halfway at the point. We'd still just really have a stripped down "starter house" but we just might have something we can build onto and grow.