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The “Cadillac Tax” is for You

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.

Troy writes:

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.

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35 Responses to The “Cadillac Tax” is for You

  1. Gruber was right about the stupid American voter, just the ones that voted for Obama or Democrats. Thanks you bunch of stupid bastards and the equally reprehensible msm.

  2. Here I am, putting on a Pollyanna hat:
    Let’s all hope that Congress won’t let this mostrosity live for 20 years, but will modify, change, delete, dismantle, or just kill the thing before it destroys all of us.

    It’s so hard to imagine a group of like-minded people forming a plan for the future that would cause so much financial, and healthcare, harm to innocent, working class people. The question of ‘to what end’ is all this sinister, secretive plan meant to achieve? It’s certainly not to increase American prosperity, not to provide healthcare for all, nor will it make the citizens appreciative of their government.
    The American people never wanted this terrible law, never asked for it, and now that it’s here, want it to go away.

    • I say kill the whole thing and let the private sector insurance companies be able to go across state lines, thereby creating a true marketplace for the consumer.

      • It’s on the new Congress’s back now. I imagine them taking it down bit by bit, for example, starting with the medical device tax which we discussed yesterday. They should even have enough votes right now to do that without waiting for the new Congress. Start work immediately because there are some Democrats who do not like the tax.

        On the other hand, I wonder if Harry Reid will stymie anything coming to the floor until the very end.

      • @AfVet, I agree. If we, the USA, can repeal constitutional amendments, then surely Congress can repeal a law that was passed with deceit, bribery, and is harming millions of us.

      • That has been the rational solution, coupled with tort reform. Prior to obamacare, perfectly good, solvent companies were not allowed to come into RI to sell us a group contract for our small business. BCBS has a racket here with the politicians/brokers to keep 90% of the business in their pocket. Outrageous.

        • I understand that part. However that was done before each and every one of the slick parts of o keeping coming out.
          There are hardworking people. Some take jobs they may not like for years….for the insurance. This is insane that innocent citizens keeping getting the messed over “polite words” from him.

  3. It’s important to understand how the Excise Tax will escalate in future years, not just impacting more people, but the tax itself increasing.

    If in the first year (2018) the employer’s cost is $12,000 for a single (or $1,800 above the threshold) then the tax is 40% of $1,800 (or $720 for each enrolled Single…and the family threshold is $27,500, but let’s keep it simple here.) If the cost of the plan increases by 8% to $12,960 and the threshold increases by inflation (e.g. 2%) to $10,404, now the tax is 40% of $2,556, or $1,022…a 42% increase!

    In this example, if an employer has 100 single enrollees and no families, the tax in the first year is $72,000 (6.0% of the premium) and in the second year it is $102,200 (7.8% of the premium).

    Continue that into the future and you can see it is not long before this breaks down.

    • It kind of reminds of those adjustable rate mortgages, only there isn’t the possibility that the rates will ever come down but just go up, up, up.

      • Hi. Kind of laid up for awhile so I’ll be in and out. But I see we had elections that obama and the dems chose to ignore . Back in line obama and the dems have forsaken American citizens for illegals and are working to make Iran obama’s nuclear bbf.

        Gruber and obama deserve to go down together but the msm will keep them afloat. And you gotta love a landrieu keystone pipeline bill. Over buffett’s dead body.

    • Best tweet I’ve read today:

      Larry Elder ✔ @larryelder

      They plan to announce the #Ferguson grand jury results on @msnbc. That gives authorities another week to prepare before anyone finds out.

    • I think Holder’s planning on convening a Federal Grand Jury if Wilson isn’t indicted by this “racist” Grand Jury ? He’s probably handpicked all the jurors by now……..just chatter noticed on the feeds.

      Methinks our tax dollars would be better spent on investigating Lisa Fithian (Queen Bee of the imported astroturf “protesters” being trained in the St. Louis area right now) …. and who’s funding them ?

      • I’m on a new computer and haven’t transferred all my files to this one, but I have a bit of information about her.

        I reckon the feds could take jurisdiction over this matter by claiming Wilson violated Brown’s civil liberties.

  4. Gruber has now worn out three shovels as he continues to frantically dig the hole he’s creating for himself. You can still hear him shoveling deep down at the bottom. But he’s no longer whistling a happy tune.

  5. I’m wondering if illegals are allowed to be covered under ACA. I read about a case here in CA, where the father was enrolling his son, who is in h.s. and an illegal, in the healthcare plan.