Following up on last week's post about the excise tax on the so-called "Cadillac" health plans, Bob Herbert has some new information in an op-ed piece in yesterday's New York Times. I'm not surprised that there's a lot of smoke and mirrors involved in the supposed cost-cutting and deficit reduction figures coming from the Senate, the CBO, and the White House. Smoke and mirrors seems to be the SOP when it comes to selling this POS.
The CBO has called the excise tax the largest factor in "bending the cost curve" as it is the largest revenue producer in the bill. Sens. Landrieu and Nelson have both said they will not vote for the final bill unless the excise tax is included, so it's a good bet it will be inthe Senate bill that the House will swallow whole so the president can have "something" by the State of the Union speech what comes out of the conference committee.
Here's where the number juggling starts:
And as the surveys cited last week pointed out, that ain't gonna happen. No way, no how. So about "bending that curve," what's 18% of $150 billion? Not much of a bend, is it?
Back to Herbert:
Really? Ya think? Somebody pass that breaking news along to the D.C dunderheads.
That'll be the day.
"There is a middle-class tax time bomb ticking in the Senate's version of President Obama's effort to reform health care...The bill that passed the Senate with such fanfare on Christmas Eve would impose a confiscatory 40 percent excise tax on so-called Cadillac health plans, which are popularly viewed as over-the-top plans held only by the very wealthy. In fact, it's a tax that in a few years will hammer millions of middle-class policyholders, forcing them to scale back their access to medical care."
The CBO has called the excise tax the largest factor in "bending the cost curve" as it is the largest revenue producer in the bill. Sens. Landrieu and Nelson have both said they will not vote for the final bill unless the excise tax is included, so it's a good bet it will be in
Here's where the number juggling starts:
"Proponents say the tax will raise nearly $150 billion over 10 years, but there's a catch. It's not expected to raise this money directly. The dirty little secret behind this onerous tax is that no one expects very many people to pay it. The idea is that rather than fork over 40 percent in taxes on the amount by which policies exceed the threshold, employers (and individuals who purchase health insurance on their own) will have little choice but to ratchet down the quality of their health plans."
...If even the plan's proponents do not expect policyholders to pay the tax, how will it raise $150 billion in a decade? Great question.
...This part of the Senate's health benefits taxation scheme requires a monumental suspension of disbelief. According to the Joint Committee on Taxation, less than 18 percent of the revenue will come from the tax itself. The rest of the $150 billion, more than 82 percent of it, will come from the income taxes paid by workers who have been given pay raises by employers who will have voluntarily handed over the money they saved by offering their employees less valuable health insurance plans."
And as the surveys cited last week pointed out, that ain't gonna happen. No way, no how. So about "bending that curve," what's 18% of $150 billion? Not much of a bend, is it?
Back to Herbert:
"In the real world, companies cut costs and they pocket the money," said Larry Cohen, president of the Communications Workers of America and a leader of the opposition to the tax."
Really? Ya think? Somebody pass that breaking news along to the D.C dunderheads.
"The tax on health benefits is being sold to the public dishonestly as something that will affect only the rich, and it makes a mockery of President Obama's repeated pledge that if you like the health coverage you have now, you can keep it...Those who believe this is a good idea should at least have the courage to be straight about it with the American people."
That'll be the day.
We already have a "KIA" plan here. We're only covered if we go to Korean doctors.
The company paid health plans for union members (SEIU exception) such as UAW, teamster,etc., will "morph" into the term cadillac health plan. Obama will throw the unions under the bus (SEIU exception of course) on this issue & agree to tax the company paid portion of these plans as income in return for the vote of those proponents in congress. Company paid health insurance should have been taxed as ordinary income when 1st introduced during a period of "wage & price freeze". Many of the self employed (including me) have low premium/catastrophic medical insurance. If we could combine that with HMA's that don't expire then you have the beginnings of a workable plan & one that will truly drive down the cost of healthcare.
Carguy - Chances are we will end up with the Pontiac or the Saturn version of the "Cadillac Plan", eh? And it looks like Volvo went to the Chinese, so all bets are off at present1
Never fear - the accounting will probably "right itself" when we move to the Amero! Just kidding!!!
OK. I am really confused now. Why is the insurance company OR the employer paying taxes on a "Cadillac Plan"? It's a benefit to the employee in lieu of income. The employee should pay the tax. PLease keep in mind my first sentence.
Some portion? Like about 100%. If you think insurance companies will eat any part of that 40% tax you have a lot more faith in insurance companies than I do. The government taxes the insurance company, the insurance company passes it along to the employer, which forces the employer to buy a cheaper plan with less coverage. Also, it's not indexed for inflation. So if a policy costs $8,000 today, who knows what it will cost 4 years from now. That's why the tax will take in more and more plans every year.
Des,
I'm confused...really.
What do you make of this from "Slate"
If I have a "Cadillac plan," will I have to pay the proposed tax myself? No. The 40 percent tax will be charged directly to the insurer. That is, the insurance company has to pay 40 cents on every dollar spent above the $8,000 or $21,000 cutoff. Some portion of that tax, however, is likely to get passed onto the consumer.
I would have to agree that personal income taxes on the employer paid portion of such a health care program ($8,500 & $23,000) would be something I would support.
A Cadillac plan in the Senate bill is one that costs $8,500 for an individual and $23,000 for a family. But that’s not just what the employee pays. That’s a combination of what the company pays and what the employee pays, the total cost of the plan. I don’t know about other companies, but in my plan what I pay is about 60% of the total cost.
Des: You know "The Tater" is always on your side. But this thing has me confused. I think where my confusion lies ('cuz we all know how smart I am) is exactly what constitutes a "Cadillac Plan?" Having never had one, I'm not sure if it should be taxed. Maybe a "Mercedes Plan" or a "Porsche Plan", for sure.
I feel as Carol does, and am concerned. But I see several good things here we don't presently have. OTOH, what comes out of conference committee MAY (as they say) look more like a camel than a horse. Not a bad deal if you are crossing the desert. A really BIG handicap if you are running in the Kentuck Derby.
As for employers paying more...that's unadulterated bs...
this one sounds like a real stinker and frankly I haven't liked the sound of it from the beginning, BUT, today's attempt at making lemonade goes like this:
What does "ratcheting" down health benefits really mean? My experience with unions is both positive and negative. On the negative what I saw first hand is that "union reps/execs" tend to save the most lucrative aspects of contracts for themselves. Who actually owns these "cadillac policies"? If it's the elites of union organizations then that truly would be business as usual to not attempt to balance that aspect of health reform. As a union member I never was an owner of a 'cadillac policy' It was roughly equivalent to the coverage I receive as a salaried employee, if not less valuable.
Every single day, I read about more crap in this bill that makes me madder than hell!
We, the people, are getting so screwed.