Unions, insurers unite to call for repeal of Obamacare 'Cadillac Tax'

It's rare when unions and businesses unite for any reason, but in the case of Obamacare's so-called "Cadillac Tax," there is broad agreement that the tax will hurt both companies and workers.

Obamacare includes a whopping 40% tax on insurance plans that offer lavish benefits - low deductibles, vision and dental coverage, etc. The government expects the tax to bring in $87 billion over 10 years.

Estimates are that the tax will affect about 26% of plans today rising to 30% by 2023 and 48% by 2028.

Washington Examiner:

Organized labor, which fought hard to pass Obamacare, has been worried about the tax's impact for years. At its 2013 convention, the AFL-CIO labor federation passed a resolution criticizing the law and demanding major changes.

Several top unions such as Unite Here, the United Brotherhood of Carpenters and Joiners, and the Laborers International Union of North America have joined a coalition group called "Alliance to Fight the 40" that also includes major health insurance companies such as Blue Cross Blue Shield Association, Cigna and New York Life Insurance Co.

The group sent a letter to all House lawmakers Monday urging them to repeal the tax. The letter disputes the argument that the tax will bring in $87 billion and argues that many employers will drop coverage or restructure it to avoid paying the tax. Those who don't drop coverage will require employees to contribute more to offset the higher cost.

Those workers won't get much in return, the alliance argued. "[I]t is economic theory, not hard evidence, supporting the claim that employers will make up lowered health benefits with higher wages," the letter stated.

One of the coalition members pointed the Washington Examiner to a 2014 study the American Health Policy Institute, a think tank whose board of governors consists of "60 chief human resources officers from America's largest employers." It cited a survey of employers that found that 30 percent would eliminate high-cost plans and 42 percent would require more worker cost-sharing.

"The more likely outcome is that workers do not get any compensating wage benefit," said Tevi Troy, president of the institute and a former deputy secretary of the Health and Human Services Department under President Bush.

The coalition also pointed to a October study by Aon Hewitt, a company that consults on human resources issues, that found that a third of businesses would "reduce the richness" of their company-provided plans and another 10 percent said they would eliminate the high-cost options.

I don't see the logic in the tax and I would hope Congress would repeal it. Does the administration believe that some people shouldn't have excellent health insurance coverage if others are stuck with the "Bronze" plan under Obamacare? Or is it just another scheme to ration health care?

Unions are reaping what they sowed. They were among Obamacare's biggest backers and now realize they bought a pig in a poke. It's ironic that they would join forces with companies who they heavily criticzed during the Obamacare debates as greedy and crooked.

But politics - and taxes - make strange bedfellows. Is it enough to overcome the certain opposition by the administration to the repeal? Given the administration's reliance on the Cadillac Tax to fund the rest of Obamacare, Republicans would do well to consider joining Democrats in repealing it.


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