Skip to comments.Some Praise for a Minor Part of Obamacare
Posted on 08/18/2014 7:02:29 AM PDT by Kaslin
I like to think that very few people despise Obamacare more than me.
I dont like Obamacare because its a fiscal boondoggle.
I dont like Obamacare because its bad healthcare policy.
I dont like Obamacare because it generated an embarrassingly bad decision by the Supreme Court.
I dont like Obamacare because it is driving people out of the labor force and into government dependency.
I dont like Obamacare because it has increased corruption in Washington.
And I dont like Obamacare because it further enriches and empowers Washingtons political class.
But I also like being honest and that means Im willing to acknowledge that theres one small part of Obamacare that will have a positive impact.
More specifically, the so-called Cadillac tax on expensive employer-provided health plans will slightly reduce the distortion in the tax code that encourages over-insurance and exacerbates the healthcare systems pervasive third-party payer problem.
Indeed, were seeing some signs of this already, even though the tax preference isnt capped until 2018. Here are some excerpts from a story published by Fox News, starting with a description of the law.
companies desperate to avoid a 40 percent ObamaCare Cadillac tax are finding ways to shift the costs to workers. The so-called Cadillac tax, now four years away, will affect health plans that spend more than $10,200 per worker. The excise tax, when it hits in 2018, will affect both employers and employees,said Brian Marcotte, president of the National Business Group on Health.
Allow me to make an important correction before sharing other parts of the story.
Companies arent shifting costs to workers. The money currently spent on health insurance policies is part of total employee compensation.
Think of it this way. If a company hires you for a salary of $50,000 and also includes a $10,000 health insurance policy, whats your total compensation?
If you give an answer other than $60,000, youre either very bad at math or you have the logic skills of a politician.
So the story should have stated that the Cadillac tax is merely making workers more aware of costs that already exist.
Thanks for letting me vent. Now back to our main point, which is that the Cadillac tax discourages overinsurance, and this is already leading to some positive changes in the marketplace.
Employees will get incentives to reduce costs through such arrangements as wellness programs, including losing weight or stopping smoking. Meanwhile, employers are shifting workers into plans with higher deductibles, just as ObamaCare does in the health care exchanges, and using health savings accounts to help defray the costs.
Im particularly happy that employers and employees are shifting to plans with higher deductibles. As Ive explained before, health insurance should cover large, unanticipated costs, such as the onset of cancer or getting injured in a car wreck.
But it shouldnt cover annual checkups, elective surgery, and other routine and/or predictable expenses.
And we have one other bit of good news. The tax isnt going to raise nearly as much money as the politicians wanted!
The Cadillac tax was originally intended to take effect sooner, but unions and other groups convinced officials to delay it until 2018, reducing the anticipated income from $137 billion to $80 billion over ten years. But many analysts predict it will be far less than that. Henry Aaron of the Brookings Institution said, before then, its expected that most of the businesses that offer that form of insurance will back off and make the insurance less generous, so the tax wont bite. if employers are able to avoid it and less than expected is collected, ObamaCare could fall tens of billions short in paying for itself as promised.
I should hasten to add, by the way, that Im glad that Obamacare isnt paying for itself since that simply means lots of taxes to accompany all the additional spending.
Id be even happier, of course, if we could figure out how to get rid of all the spending as well.
Just in case folks are thinking Ive gone soft, lets close todays post with some humor directed at the rest of Obamacare.
Since the IRS is a big part of Obamacare, heres a particularly good bumper sticker that shares a line with the above poster.
Heres a poster mocking the delightful fiscal impact of the law.
Though whoever put this together should have been careful of using The Joker.
I like this next poster since it highlights how politicians have exempted themselves from the law.
Last but not least, heres Dr. Obama making a cameo appearance.
Ah, the IRS shows up again. Do you sense a theme?
And dont forget the IRS bureaucrats want to be exempt from the law as well.
P.S. If youre a glass-one-tenth-full person, heres some other good news about Obamacare.
“The so-called Cadillac tax, now four years away, will affect health plans that spend more than $10,200 per worker.”
By this measure, most ocare plans are cadillac plans! LOL
Well, SOMETHING needs to wake workers up to the reality of “free” benefits, they are NOT free, they may be TAX free but considering that the employer could drop the benefit and add that much to your paycheck without making one iota of difference to his bottom line those benefits should be seen as deducted from the paycheck. Few people seem to ever think about that and the government encourages them not to with lines like, “Your employer pays every penny of the unemployment tax, none of it is deducted from your pay and the employer pays half of the medicare and social security tax. The truth is that the employer could add that much to your paycheck if he didn’t have the tax to pay and it would not matter one way or the other to the employer. Therefore it is IN EFFECT a deduction from the employee’s gross pay. The “cadillac tax” on health insurance is just a way to tax what has heretofore been a “taxfree benefit” but not really a “free” benefit.
Those of us who have run a business and written our own paychecks are under no illusion as to who actually pays for benefits or unemployment compensation or the “other half” of the payroll tax. Anyone who works for decades without drawing unemployment compensation has had a percentage of his work taken from him and given to others who have not worked contiuously all that time. Social security and medicare are in fact one hundred percent at the expense of the employee, anything to the contrary is merely bookkeeping smoke and mirrors.
Since most people pay their share of a company provide healthcare plan pre-tax, it doesn’t matter whether the employer of the employee is paying, it is not taxed. However, when the employer shifts cost to the employee, that does not necessarily mean that the employer increases the employees pay to cover the increased expense. So effectively the employees compensation is decreased. The Cadillac tax will effectively equate to a pay cut for the employees.
“The Cadillac tax will effectively equate to a pay cut for the employees.”
I thought I made it clear that I understand that. My point is that the employer COULD cancel benefits and increase pay by the same amount and it would make zero difference to the employer. Actually it would be easier on the employer because there would be less bookkeeping. Of course none of that suggests or implies that anytime benefits are canceled the pay is always increased accordingly.