When the U.S. Chamber of Commerce and the AFL-CIO agree on something, that’s news. But we’re talking about healthcare reform here, so anything’s possible.
The area of agreement is the opposition to the proposed 40% excise tax on so-called “Cadillac” health plans — those whose premiums exceed $8,500 for individuals and $23,000 for families.
Under the proposal, the tax would be levied on insurance companies that offer such plans and on employers who self-insure. The Congressional Budget Office says the tax would provide $149 billion in revenue by 2019. Further, proponents of the tax say it will help curb healthcare costs by forcing employees to be more aware of their medical spending and and by discouraging insurance companies and employers from offering lavish plans.
Employers and unions firmly oppose the plan, for different reasons:
- Unions contend their workers have given up wage increases in return for more better benefits. Labor leaders warn that the excise tax will force cuts in benefits or pass-along cost increases to workers. In an e-mail to members, the Teamsters said the tax would fall on one-third of Americans in a decade, and the average affected household would pay $7,600 more in taxes between 2013 and 2019. Further, as health-plan costs would almost certainly rise in the coming years, the tax would hit more and more people whose premiums would grown into the “Cadillac” category.
- Employer groups note that about 160 million people receive health coverage through employers that self-insure. The Chamber of Commerce argues that those employers will be hit with the cost burden, likely resulting in reduced worker benefits to avoid the tax or reduced wages to make up for the tax.
Both sides also argue the tax would be a killer in high-cost areas such as California or the Northeast, where health plans tend to be more expensive.
