The Building Tradesman Newspaper

Friday, December 25, 2015

Unions win with 'Cadillac Tax' delay

By The Building Tradesman

By Mark Gruenberg
PAI Staff Writer

WASHINGTON (PAI)—Workers scored a win in Congress as lawmakers decided to delay imposing the so-called “Cadillac tax” on high-value health care plans - like those held by building trades unions - for two more years, to 2020. The delay was inserted into the massive money bill to keep the government going.

The provision also says that when the Cadillac tax does kick in, it’ll be “fully refundable.”

“That’s a relief,” AFL-CIO Legislative Director Bill Samuel said about the Cadillac tax delay. He told Press Associates Union News Service in an interview that unions and workers “will now have two more years to continue the battle” to repeal it entirely.

President Barack Obama put the Cadillac Tax into the Affordable Care Act in last-minute bargaining over the law in 2010, and over unions’ and workers’ heated objections.

The tax would have taken effect in 2018, and it would be 40 percent on the value, above $10,200 yearly for an individual and $27,500 for a family, of each health care plan. Its revenues are supposed to help pay for expanding health care to low-income people.

But firms and insurers already use the looming Cadillac Tax to shove more health care costs onto their workers, unions and workers report.

Obama claimed the tax would discourage overuse of health care plans, by making workers and families wiser consumers. But unions and workers retorted that it would penalize them, and that firms would shift even more health-care costs onto their backs. In contract bargaining, many companies are already demanding such cost shifts.

National Nurses United’s retort to Obama is typical. “The inevitable result” of the tax “will be fewer employers offering good health benefits and far more people pushed into skeletal high-deductible plans with far less coverage and much higher out-of-pocket costs,” NNU says.

So the unions and their allies, including some businesses, launched a huge campaign to entirely repeal the Cadillac tax. They didn’t get that, but they got the delay.

"It's a tax that's not well thought out," said Timothy Jost, professor of law at Washington and Lee University, to CNN/Money. "It's not very fair. It's probably not very effective at accomplishing its goal of reducing health care costs." He added: "It's hard to believe it is simply being delayed for two years and not repealed" since every major presidential candidate opposes it.

Both Democrats and Republicans overwhelmingly opposed the Cadillac Tax, albeit for different reasons. Sen. Sherrod Brown (D-Ohio) told Politico that the two-year delay would give Democrats more time to think about Obamacare’s future in a smart way. “I think it only helps with its implementation. It will run more smoothly, and I think we will fix the fiscal issues around it,” he said.