OPINION — There’s nothing worse than being tricked. That’s exactly what the so-called “Cadillac tax” is: a deceptively named trick that will utterly destroy what is left of America’s private employer-based insurance market.
During the run-up to the passage of the Affordable Care Act, the Cadillac tax was hailed as an amazing Robin Hood scheme. It would supposedly take money from those evil rich people who had somehow managed to garner exorbitantly fancy health insurance for themselves and sprinkle that cash around to everyone else.
Like most political promises, the plan falls flat under closer examination.
Rather than targeting the rich, the Cadillac tax – which is scheduled to take effect in 2020 – will be a blow to almost every single American who receives health insurance through an employer. In total, as many as 177 million Americans stand to pay more for their health coverage, face reduced benefits or both.
The Cadillac tax will hit Utah harder than almost any other state in the nation.
A stunning 59 percent of the Beehive State’s population relies on employer-based health insurance for their coverage – only New Hampshire has a higher percentage of residents served by workplace health insurance than Utah. In total, 1.8 million Utahns’ health insurance may be in jeopardy thanks to the Cadillac tax.
When the hammer drops in 2020, health insurance plans valued at more than $10,800 for individuals and $29,100 for a family will trigger a 40 percent tax paid by employers. Those figures don’t account for the difference in health care costs in different areas.
Utah happens to be a “high-cost” state where health care, in general, happens to cost more than other areas of the country. And since the threshold for the tax doesn’t increase based on health care inflation, more and more insurance plans will fall subject to the tax every year.
In fact, the Cadillac tax will cost American families an average of $5,000 over 10 years due to higher premiums, according to Marilyn Tavenner, the former head of Medicare.
Lower-income Utahns will be hurt the most by the Cadillac tax. The working poor will see higher deductibles, less coverage and diminished networks from which to choose doctors. Middle-class workers with employer-based plans will pay higher premiums for worse coverage. In fact, this is already happening in anticipation of the tax.
Employers depend on a healthy and productive workforce to keep their businesses thriving. Many offer on-site medical clinics, employee assistance and wellness programs to keep their employees healthy and control costs. These programs are in jeopardy because of the Cadillac tax.
Everyone loses as a result of this poorly designed tax. Large Utah employers like Delta, Costco, Vivint, Pure Storage, Marriott, Fleming’s Steakhouse, 1-800 Contacts, Supplemental Health Care, Coldwell Banker and Ancestry.com will inevitably see harm from the Cadillac tax.
Small and public employers will be hit as well – including teachers, firefighters and law enforcement officers. All employers will be forced to respond to the tax with higher prices for their customers and worse health coverage for their employees.
Contrary to what a few lawmakers and bureaucrats think, no one should be punished for having a health insurance policy that provides affordable access to a range of doctors and services.
The Cadillac tax must be stopped before it harms countless Utahns who depend upon their employer-based health insurance. The solution lies with our elected officials: Congress must pass legislation to repeal this horrific tax and get it on President Trump’s desk as soon as possible.
Written by MICHAEL MELENDEZ, director of policy at Libertas Institute, a public policy think tank in Utah, and DREW JOHNSON, a senior scholar at the Washington, D.C.,-based Taxpayers Protection Alliance. A version of this article originally appeared in The Salt Lake Tribune.
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“Large Utah employers like…Fleming’s Steakhouse”??? LOL, their one Utah location in Salt Lake City must have an unusually large staff to qualify as a “large Utah employer.” “Utah happens to be a “high-cost” state where health care, in general, happens to cost more than other areas of the country” Wrong again. By virtually every commonly used metric, Utah has among the lowest cost for health care, and our lower insurance premiums bear that out. Did these guys get anything right?
It does have higher auto insurance tho, higher than California. My auto insurance jumped up $500 a year moving to St. George. I don’t know about healthcare, I had a decent plan when I was there. It was a High deductible but if you planned all your surgeries in one year, it helped. ? one Tylenol cost over $5.00 in the hospital- talk about price gouging heehee
The four parts of health care coverage: the patient, medical provider, insurance company and government are at odds. If the patient and his medical care provider could negotiate in an open market, cost would drop dramatically. It’s the insurance company greed for profit and government pimping for them that messes up the process.
If I could negotiate a price for a medical service in an open and transparent market, then I could decide if I want comprehensive insipurance coverage or just catastrophic coverage. I can afford routine medical fees but I can’t afford major cancer treatment. Government assumes people need total comprehensive coverage for medical services and drugs. Americans have bought in.
If we want comprehensive coverage for every American, it is going to double your tax burden.
Wouldn’t it be better to pay the routine medical expenses and then buy catastrophic insurance coverage in an open market across state lines? We do this with home owners insurance which does not cover day to day expenses for home repairs. It only covers a big catastrophe like a fire or negligence lawsuit.
Let’s repeal Obamacare and start over making better assumptions about our needs. Cutting government and insurance companies out of the equation would improve care at a much lower cost to the patient.
Get the government out of our healthcare and out of our insurance. Let each and every American decide and choose what they want. No more taxes and penalties; no more government mandated minimum insurance requirements. I don’t need maternity coverage, so why should I pay for it? And at the end of the day, Obamacare has done nothing to address the increasing cost of healthcare.
I don’t need maternity coverage either. This baby making machine is done!