Obamacare's 'Cadillac tax' causing union strife
The draconian fee is targeted at high-cost health insurance plans, but unions are balking at reducing benefits. The result may be job losses.
The Affordable Care Act's "Cadillac tax" won't go into effect until 2018, but it's already causing trouble.
Some municipalities are now negotiating with unions on lowering their health-care spending, but labor groups aren't eager to come to the bargaining table, The New York Times reports.
If municipal employees don't accept lower-cost health care plans, the Cadillac tax may lead to job losses and stagnant wages among municipal employees, and even higher burdens on taxpayers, the report notes.
Here's how the Cadillac tax works: If an employer-provided health insurance policy costs more than $10,200 for an individual, the employer will be taxed 40% of what's considered an "excess benefit," according to insurer Aetna (AET). The tax kicks in for $27,500 in spending on family coverage.
The thinking behind the tax is that the penalty will create an incentive to scale back excessive spending. Since state and local governments typically offer pricier health plans than private businesses, they may bear a bigger burden under the Cadillac plan.
That tax is pegged to provide $80 billion to the federal government over the next decade, according to a Congressional Budget Office report issued in May.
But that's likely to come at a cost for both taxpayers and municipal workers.
Cities including New York and Boston are cautioning unions that without reductions in health care costs, the tax will result in possible job losses or a lack of raises, The Times notes. In New York City, the Cadillac tax could mount to $549 million by 2022, according to an estimate from the city's deputy mayor for operations.
"In the end, it’s the taxpayer that’s going to bear that burden,” Jim Finley, the executive director of the Connecticut Conference of Municipalities, told the Times.
Follow Aimee Picchi on Twitter at @aimeepicchi.
Well, the Obumers got just what they asked for. A health plan that nobody in DC bothered to read before it was passed into law. And the lackey unions and their sheep blindly walked off a cliff with Nancy and Harry leading the charge.
Good luck on this one. A true disaster in the making.
Time to stop working, get a couple Obama phones, a bridge card and SS disability. Live high on the Obama!!!!!!
This law is disastrous this is only the tip of the iceberg. No doubt that the healthcare system needs fixed but all this law did was break it further. there should have been years of study and a carefully drafted law to fix the issues. Not something that was drafted in a hurry, not read by anyone who voted on it, and pushed through the legislature before the midterm elections because the Dems thought they might loose the house.
Shameful display of governing by our elected officials.
Perhaps the solution is to see why private insurance administrative fees are so high (compared to medicare) and work to reduce their overhead?-- Good idea. The cost is what is killing people.
We have those that can afford any premium, copay, deductible, and max out of pocket. Then we have the Medicaid group which I think pay nothing. Then we have the Medicare group and they need a supplemental policy or get Medicaid too to pay off what medicare does not pay. We have those that work for the gov and large corporations and have a huge advantage of being part of large groups which brings the cost down. By the way the large corp's only supply 8% of our jobs. Not sure what the gov. number is. Then we have the middle class that gets screwed.
We need to get away from all healthcare by employer or gov. and purchase all on the open market thus getting the cost down. We are killing our companies with current and legacy costs.
The only thing unions and gov. and employers should be concerned with is workman's comp, disability,
and LT care, all having to do with getting hurt or disabled ON THE JOB.
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