OPINION: It’s Time For Washington To Junk Obamacare’s Cadillac Tax
Nearly ten years ago, President Obama and Democratic leadership hoodwinked many in their own party to support a new tax on healthcare nicknamed the “Cadillac Tax.” They said, “Don’t worry, this tax is only going to hit those fancy Wall Street-types with gold-plated health insurance plans.” And so, the tax was passed into law as part of the Affordable Care Act with an effective date of 2018, because Obama didn’t want to be around when it took effect and people discovered the truth.
The truth is this is a tax on the health insurance that more than 181 million Americans get from their employers. The truth is this tax actually hits Main Street with a vengeance. The truth is, even though the effective date has been kicked down the road – twice – this tax is already forcing employers to trim benefits and shift costs on to workers.
If you can’t afford a Cadillac, you can’t afford the “Cadillac Tax.”
This so-called “Cadillac Tax” recklessly taxes health insurance millions of working Americans enjoy as a benefit of their job. It was conceived as part of Obamacare but it’s unpopular on both sides of the aisle, with over 300 House members supporting legislation to repeal it.
Lack of candor is one of the tax’s problems. Its very nickname is misleading since it has nothing to do with fancy cars or extravagant health insurance.
Just as Americans were falsely promised, “If you like your insurance, you can keep it,” we were told this Obamacare tax will effect only a small percentage of the most “luxurious” high-end plans. Not true.
The fact is, the majority of health insurance plans Americans receive through their jobs will be hit by this tax less than ten years from now.
It’s falsely advertised as a tax on employers providing fancy benefits. In fact, employees’ contributions to their plans are taxed as well. In addition, families, retirees and workers end up paying for it through higher premiums, co-pays and larger deductibles.
Many employees are already feeling the pinch. Companies plan their expenditures years in advance, and they have already begun scaling back employees’ health benefits to avoid the future expense. Several large employers are dropping employees’ spouses or implementing surcharges for their coverage in response to the tax. Now, employees are seeing their deductibles and co-pays rise while their coverage shrinks.
This tax is based on the unfounded assumption that comprehensive employee health benefits are making health care costs higher for everyone. Wrong again. Evidence shows that a combination of high-cost regions of the country, an aging population and a small percentage (5 percent) of patients who suffer from chronic diseases are the primary drivers of health care inflation.
The tax’s creators also claimed that employees who lost their health benefits would be made whole with higher wages. That hasn’t happened. Employers are already scaling back benefits, but they are passing on costs, not savings, to their employees. Families’ premiums have increased by over a third since 2010.
This ObamaCare tax defies common sense. Ronald Reagan said, “If you want less of something, tax it.” We want businesses to keep the workforce and families healthy. We should encourage companies to do that, not penalize them for doing it well.
Health insurance benefits are wildly popular with workers. Surveys show 71 percent like their health insurance benefit. But this tax promises to eliminate employer-provided insurance plans as more and more plans fall under its hammer.
One would be forgiven for suspecting this tax is a step toward a single-payer system. Why else would the bureaucracy want to eliminate company-provided health benefits that compete with — and outperform — standardized government-approved gold, silver and bronze insurance plans?
A healthy and sustainable insurance market depends on a variety of options and plans, and that includes employer-provided plans. Company-sponsored health plans have led the way in innovations that lower costs and improve quality.
But unless Congress acts now, families, women, retirees and people with pre-existing conditions will be hit hard with this Obamacare tax. These hardworking Americans, who can least afford it, are already paying now.
This benefits tax embodies all the worst aspects of Obamacare. It’s based on flawed premises, untested theories and incorrect assumptions, from the same people who said 2 percent economic growth is the new normal and manufacturing jobs will never come back.
Congress needs to reverse this misguided policy and repeal the so-called “Cadillac Tax” now. And that is the truth.
Curtis Ellis is chairman emeritus of the American Jobs Alliance. He served as a senior policy advisor on the Donald J. Trump for President campaign and subsequently served on the Presidential Transition Team.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.