Damnit People, IGNORE THE SPIN. Inform yourselves about what the AWFUL "Cadillac Tax" MEANS for YOU

chimpymustgo

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Thu Jan-07-10 04:14 PM
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Damnit People, IGNORE THE SPIN. Inform yourselves about what the AWFUL "Cadillac Tax" MEANS for YOU

It will hit many MIDDLE CLASS health plans, and lead to lessening of coverage - thus the "cost cutting". Obama prefers this to taxing the FAT CATs, as the House plan would. NYT's Bob Herbert explains it well. Below are additional links to AFL-CIO, USA Today, Huffington Post.

http://query.nytimes.com/gst/fullpage.html?res=9C02E0DE...

A Less Than Honest Policy

By BOB HERBERT
Published: December 29, 2009

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.

Which is exactly what the tax is designed to do.

The tax would kick in on plans exceeding $23,000 annually for family coverage and $8,500 for individuals, starting in 2013. In the first year it would affect relatively few people in the middle class. But because of the steadily rising costs of health care in the U.S., more and more plans would reach the taxation threshold each year.

Within three years of its implementation, according to the Congressional Budget Office, the tax would apply to nearly 20 percent of all workers with employer-provided health coverage in the country, affecting some 31 million people. Within six years, according to Congress's Joint Committee on Taxation, the tax would reach a fifth of all households earning between $50,000 and $75,000 annually. Those families can hardly be considered very wealthy.

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.

These lower-value plans would have higher out-of-pocket costs, thus increasing the very things that are so maddening to so many policyholders right now: higher and higher co-payments, soaring deductibles and so forth. Some of the benefits of higher-end policies can be expected in many cases to go by the boards: dental and vision care, for example, and expensive mental health coverage.

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We all remember learning in school about the suspension of disbelief. 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.

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http://query.nytimes.com/gst/fullpage.html?res=9C02E0DE...
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Health Care Reform Tax Hits More Chevys Than Caddies

by Mike Hall, Jan 7, 2010

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Backers of the tax say it would impact only “Cadillac plans” but the Economic Policy Institute (EPI) calls that an “urban legend.” Says EPI economist Josh Bevins:

The excise tax proponents say their target is a Cadillac, but in reality they’re about as likely to hit a Chevy. The excise tax is not a progressive levy on lavish plans. Instead it’s a tax that will hit small businesses, older workers, and those most in need of health care the hardest.

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National Nurses United (NNU), the largest registered nurses union in the country, calls the tax scheme “unconscionable” and says working families “would have their health coverage taxed and seriously eroded,” if it is enacted.

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the excise tax on insurance—especially in contrast to surtax on the rich—proves to be just as bad as policy as it is politically. It’s intellectually bankrupt and widely despised.
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http://blog.aflcio.org/2010/01/07/health-care-reform-tax-hits-more-chevys-than-caddies/

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'Cadillac Tax' in Health Plan Would Hit Middle Class Hard
Posted:
12/17/09

Jim Huber, 59, calls himself "a union dirt guy." He has worked in the same Maryland steel mill for 41 years, where his father and grandfather worked before him and where his son now works, too.

Huber makes a base salary of $42,000 per year as an electrician in the plant. He drives a Ford pick-up truck and lives in a row house across the street from the house where he grew up. Although he had hoped to retire from the mill years ago, a bankruptcy at his company slashed his pension by more than half. "It looks I won't get out of here until I'm 65," he said.

Huber, who is also a United Steel Workers benefits representative, said that based on the health benefits they receive, he and every worker at his plant would be hit by the excise tax on insurance companies now moving through the Senate as a part of health care reform.

"The government is going to put together a plan of health care for everyone, but they can't tax the guy that's pulling the cart." he said.

The levy has been dubbed the "Cadillac tax," but research shows it would likely affect a broad swath of Americans regardless of their income, which could indeed amount to the tax on the middle-class that President Obama promised would not happen under his administration. The tax is a growing source of anxiety for Huber and his co-workers, but also for Democrats in the House, who vow to strip the measure out of the bill in conference or consider bringing the bill down altogether.

The confusion surrounding the tax comes from its complexity and the luxury car it is named for. When President Obama first raised the idea of taxing insurance companies this summer, he framed it as one way to get Wall Street executives to pay their fair share. Obama told PBS' Jim Lehrer he wanted to target "super, gold-plated Cadillac plans." Days later, Obama's senior adviser David Axelrod told The New York Times the administration wanted to tax benefits "like the ones that the executives at Goldman Sachs have, the $40,000 policies."

At the time, Obama said he did not want the tax to hit middle-class families, but when the bill emerged from the Senate Finance Committee in September, it proposed charging insurance companies and a 40 percent excise tax for high-dollar -- but not exactly gold-plated -- plans. The bill now calls for the tax to apply to plans exceeding $8,500 for individuals and $23,000 for families, for the cost of combining health savings accounts, medical, prescription drugs, dental, vision, etc. The tax is charged to insurance companies, but it is widely assumed they would pass it on to employers.
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"The middle class can't afford another tax," he said. "Let them get it from the Bush folks, the 1 percent that's been enjoying the tax cuts. Get it from them."
http://www.politicsdaily.com/2009/12/17/cadillac-tax-in-health-plan-would-hit-middle-class-hard?icid=sphere_blogsmith_inpage_sphere

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Health Care: Tax Which Cadillac?

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Never mind that the idea is the very one about which candidate Barack Obama ripped apart candidate John McCain. Now President Obama and the Senate Democrats are ripping it off because heaven forbid they'd otherwise have to finance some of the health care reforms with a higher levy on the wealthy.
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http://www.huffingtonpost.com/bob-franken/health-care-tax-which-cad_b_414518.html
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Is tax on 'Cadillac' health insurance plans fair?

By Carla K. Johnson, The Associated Press
Schoolteacher Kinzi Blair makes only $46,000 a year, but she has what many would consider a "Cadillac" health plan, now targeted for a big tax increase by health reformers.

She has $10 copays and no deductible. She gets generic prescription drugs for $10. Her plan covers mental health counseling, organ transplants, acupuncture. It covers speech therapy for preschoolers and in vitro fertilization.

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Taxing plans like hers is unfair, says Blair, a kindergarten teacher in San Jose, Calif. Like 57% of Americans surveyed in a recent Associated Press poll, she favors a new income tax on wealthy Americans, which the House would impose in its bill to pay for expanding insurance coverage to millions.

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The tax on high-dollar health plans would hit only a few very wealthy Americans and many more in the middle class, experts agree. But it also might bring down health care costs by discouraging companies from offering coverage with so many benefits.

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http://www.usatoday.com/news/health/2009-11-25-insurance-reform_N.htm

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