For me? You say. But I’m just a regular guy – or gal – without all those fancy benefits.
Well, no matter, the Cadillac tax is for you too.
As Tevi Troy, president of the American Health Policy Institute and a former deputy secretary of Health and Human Services, notes in today’s Wall Street Journal, the Obamacare tax on the most generous health plans – a 40 percent excise tax on employer-sponsored plans spending more than $10,200 per employee – will increasingly hit middle class families.
You see, the tax is indexed over the long term to inflation, so it covers higher-cost plans over time. HOWEVER, health care spending rises much more quickly than inflation, so plans will become more generous at a faster rate than inflation. Of course, the designers of Obamacare knew this full well.
He quotes the notorious Jonathan Gruber, architect of Obamacare:
Mr. Gruber also implicitly acknowledged that calling the excise tax a “Cadillac” tax is misleading, as the tax’s reach will expand. “Over time it’s gonna apply to more and more health-insurance plans,” he said, elaborating in a separate speech that the “tax that starts out hitting only 8% of the insurance plans essentially amounts over the next 20 years [to] essentially getting rid of the exclusion for employer-sponsored plans.”
By getting rid of the exclusion he means that health care benefits, which get a pass from taxation, will eventually be taxed at around the same rate as income.
From 2018 to 2024, the excise tax could cost 12.1 million employees an average $1,050 in higher payroll and income taxes a year, if employers increase their taxable wages as they reduce the cost of health-care benefits. Alternatively, if employers only reduce the value of their offerings without increasing wages and salaries, these employees could see up to a $6,150 reduction in their health-care benefits and little or no increase in pay . . .
This means that eventually the excise tax will affect an increasing number of workers who don’t have top-flight health insurance. By 2031 the cost of the average family health-care plan is expected to hit the excise-tax threshold.
Don’t forget, of course, plans will raise your costs because of the tax, even if you don’t have a Cadillac plan.
So, whether you’ve got a Camry or a Cadillac you’re going to pay. Because profit is the gasoline that drives insurers, and you use the same gasoline no matter what make and model you own.