by Katherine Restrepo
Director of Health Care Policy, John Locke Foundation
…Until the Obamacare “marketplaces” open for enrollment on October 1.
Under the tax, plans that cost above a certain threshold in 2018 — $10,200 annually for individual plans and $27,500 for family plans, with slightly higher cutoffs for retirees and those in high-risk professions like law enforcement — will be taxed at 40 percent of their costs in excess of the limit. (The thresholds will rise with inflation after 2018.)
While the Cadillac tax will not be implemented until 2018, employers face a major obstacle: How to negotiate less comprehensive benefits with government workers who are accustomed to receiving generous benefits that compensate for lower wages. The excise tax intends to rein in health care costs, as employees may end up with less costly, high deductible health plans that require more out-of-pocket expenditures
However, the Tax Foundation posts:
However, the excise tax is an odd way of accomplishing this. A better way would have been to just cap the tax exclusion for employer-sponsored health insurance. However, that was not politically feasible, especially with strong union opposition. So instead, lawmakers imposed the tax on insurance companies to drive up the price of insurance instead.
It will be interesting to see if this trend towards lower-cost insurance plan continues, or if employees value high-end insurance plans so much that they are willing to take an even larger hit in their wages to get them.