The ‘Cadillac tax’ and blatant political hypocrisy

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In their latest attack on ObamaCare, congressional Republicans are targeting their repeal efforts on the so-called “Cadillac tax.”

What’s that, you ask?

Well, it has nothing to do with Cadillacs, except metaphorically. Right now, Americans aren’t taxed on the amount that their employers spend to give them health insurance — it’s treated as tax-free earned income, so to speak. But beginning in 2018, that would change for those who enjoy the more expensive health-insurance policies on the market.

Here’s how it works:

In general, if you and your employer spend less than $10,800 on individual health-care coverage, or less than $27,500 to buy family coverage, the benefit would still be tax-free. However, any amount spent above those ceilings would become taxable.

That is designed to achieve two goals. One is to raise revenue needed to help offset other ObamaCare costs. But perhaps more importantly, the tax is designed to discourage employers from offering gold-plated health-care plans that require no co-payments or have low or no deductibles.

According to health-care experts on both the right and left, such plans encourage people to overuse the health-care system. If you require co-pays and deductibles for things other than annual physicals and basic tests, etc., people will be a little more thoughtful about going to the doctor, usage will drop, costs will drop, etc. In conserva-speak, the approach “enlists market forces” to lower costs and make consumers more responsible.

But congressional Republicans aren’t buying it. They don’t like it, and they want to repeal it.**

“We’ve wanted to repeal it since it was passed. We’re all ready,” House Budget Chairman Tom Price, R-Ga., told National Journal. “All the taxes in Obamacare are destructive, so anything we can do in the direction of repealing is a wise idea.”

But here’s where it gets interesting:

Earlier this month, Price introduced the latest version of his “Empowering Patients First Act”, which he bills as a conservative replacement for ObamaCare. I may come back later with a more comprehensive analysis of the bill, particularly if it gains any traction, but for now I’d like to point your attention to Section 131.

Here’s how it is described in an analysis that was posted by Price’s own office:

“Sec. 131. Limitation on Employer-Provided Health Care Coverage

  • Allows for the employer exclusion of health care coverage up to $20,000 for a family and $8,000 for an individual, with any additional funds used to be taxable dollars.”

Translated into English, Price’s plan would impose the very same “Cadillac Tax” approach that he condemns as “destructive” in ObamaCare and is trying to repeal. Under his own bill, as described by his own office, any amount spent on health insurance above $8,000 for an individual and $20,000 for a family would be taxable as income.

Yes, the details are slightly different. Price’s approach kicks in earlier — 2016 instead of 2018 — and sets a lower dollar amount than under ObamaCare, which means a lot more middle-class Americans would pay the tax.  Overall, according to a quite-friendly analysis of the Price plan by a conservative group, his version of the Cadillac tax would raise considerably more revenue ($130 billion by 2023) than the Obama version ($87 billion by 2025).

This is why it’s hard to take conservatives seriously on such matters. They viciously condemn ObamaCare, even though it is a product of conservative think tanks and was long championed by conservative politicians before Obama embraced it. Likewise, they bitterly condemn provisions such as the Cadillac tax, even while they themselves propose legislation that would impose an even more onerous version of that very same tax.

Oh, and it’s now May 20. We are now roughly a month away from the Supreme Court ruling on whether ObamaCare survives in states such as Georgia that refused to establish their own insurance exchanges. Yet I see no sign that Republicans are building a consensus among themselves about how to respond if that happens. I see no sign of leadership, no sign of action, no sign of committee hearings on the Price bill or other proposals. Nothing.

In short, it could be a very interesting summer.

——————————–
** Labor unions that have negotiated so-called “Cadillac plans” for their membership have lobbied hard for an exception to the tax, both in the 2009 drafting of the bill and later in requesting a waiver from the Obama administration. They have been unsuccessful in both efforts. As a result, some labor-friendly Democrats may also be willing to vote in favor of repealing the tax. That would be extremely foolish, because as Price’s bill makes clear, what comes next would be even worse.

Reader Comments 0

932 comments
GaGirl53171875
GaGirl53171875

Thanks, Jay, for pointing out the enormous hypocrisy of the GOP.

I hope the Supreme Court destroys Obamacare. So many people will wake up, just like the man in North Carolina who refused to buy insurance because he hated Obamacare. He found out real quick that he screwed up. Now he's changed his tune.

alexander2
alexander2

ME foreighn policy does not appear to be working. Pentagon hasn't got ISIS right, Iraq/ Syria a shambles.. Perhaps we should send in our varsity against the ISIS "JV" team...what a mess..

cigs
cigs

The answer is socialized medicine

td1234
td1234

@GaBlue My taxes has increased since Obama has taken office by at least 7%. 

td1234
td1234

@Paul42 Really? How many times in the past 6 years have we heard that Obama was not to blame for the IRS scandal, VA problems, Secret service problems... because he can not control the government? 


It seems Obama has told us that the Federal bureaucracy cannot be controlled so therefore it is its own entity.  

Numbers_R_Us
Numbers_R_Us

@GaBlue @td1234 Better yet, just look back before the age of Obamacare and tell us all about how great things worked then.  Then again, td and his fellow Republicans cannot seem to remember even that far back.

td1234
td1234

@RaindroidWillBoy I have posted the article twice on this thread and have yet to get one progressive response. It seems they to not want to face the reality of the situation as long as they are getting their government payments. 

GaGirl53171875
GaGirl53171875

Yes, being underinsured is terrible. Rember how awful it was when folks were going bankrupt because they could not buy insurance? Remember when you were not covered for a pre existing condition? Remember when people could not even afford to buy insurance, much less afford the deductibles.

People have the freedom to buy any plan on the market and they receive subsidies if they need it.

td1234
td1234

@GaGirl53171875 Remember when we use to have the money to pave the roads and send men to space? Where do you think that money has gone?

alexander2
alexander2

@GaGirl53171875 Yes, because someone elses higher deductible is paying for it, just remember that. Those that do so have the "right" to disagree...

GaGirl53171875
GaGirl53171875

Tax cuts for rich folks. Talk to Charles and David Koch. They are holding the money in their underground silo where they will live when they make the planet uninhabitable.

GaBlue
GaBlue

@Numbers_R_Us

They're counting on all those folks denied insurance for pre-existing conditions being DEAD now, and not bringing that up.

td1234
td1234

@Numbers_R_Us What Republicans have claimed the market was open prior to Obamacare? 


Tell us what Obamacare has really done for the average middle class worker in this country?

td1234
td1234

@GaBlue Tell us what Obamacare has done for the average middle class worker?

td1234
td1234

@Paul42 Only when you believe government is the solution. 

DownInAlbany
DownInAlbany

@td1234 @GaGirl53171875 The record for annual tax receipts has been broken a couple of times since Obama took office.

But, we don't have a spending problem. 

snirt

td1234
td1234

@consumedconsumer Military spending, even with two wars, as a % of GDP is at its lowest point since the end of WW2 but overall government spending is at the same levels. Tell us again where the money is going? 

td1234
td1234

@Numbers_R_Us And yet the Obama government is reporting all time records in tax receipts. 

GaGirl53171875
GaGirl53171875

President Obama is not a king TD. He works in tandem with Congress. I have never heard the president say that Federal govt cannot be controlled.

GaGirl53171875
GaGirl53171875

That is BS. The deficit has been cut in half. Know why GOP politicians no longer talk about watching the deficit ticker go up on their computers? They don't want folks to know the ticker is going backwards. I don't know why they worry, they convince people like you that up is down all the time.

Paul42
Paul42

@RaindroidWillBoy

Yep, high deductibles can be nearly as big a problem for some as the inability to even get insurance, which was the case before.

As is true in so many areas, it's pretty easy to point out problems, pretty difficult to come up with solutions.

GaGirl53171875
GaGirl53171875

AMEN Paul 42! There is an article on salon.com that discusses how we went from being to citizens to consumers to taxpayers. Taxpayers is the term used to pit folks against each other. Typical GOP.

Numbers_R_Us
Numbers_R_Us

@td1234 @GaBlue So tell us all about the taxes passed by Obama that caused your taxes to increase.  Be specific.

consumedconsumer
consumedconsumer

@td1234 @GaGirl53171875 RE: "Remember when we use to have the money to pave the roads and send men to space? Where do you think that money has gone?"


Iraq . . . Afghanistan . . .

GaGirl53171875
GaGirl53171875

Yeah, the GOP doesn't mind taxing middle-class. Google and read GOP tax legislation. Middle class no tax cuts? Oh yeah, it's supposed to trickle down to YOU. You know all that money the 1% saves in taxes. You haven't received the trickle?

GaBlue
GaBlue

YEAH, td! If you just worked harder instead of being such a lazy moocher, you'd make enough money to get the kind of tax cuts the top 2% enjoy. It's called an "incentive." DUH!

Numbers_R_Us
Numbers_R_Us

@td1234 @Numbers_R_Us The reality is that you, like the typical Republican, looks to point fingers and demand fixes by others for everything you see wrong in others while refusing to look within.

GaBlue
GaBlue

@td1234

So.... you think an unregulated insurance industry would solve the problem of high deductibles? OH, please tell us how you think that will work! (And I'll keep asking until I get a real answer, 'cause I wanna be like you, buddy!)

Paul42
Paul42

@td1234

"The government" is US, td.  All the citizens in America.  WE are the government.


Honestly, this idea that 'government is some separate entity, like GM or Bank of America, that inserted itself in Washington to rule the country for its own interests' is one of the most unAmerican ideas I've seen that's taken hold with today's conservatives.


Now, back to all the other requests that you come up with one idea for a solution, original or not - 

consumedconsumer
consumedconsumer

So how much more should the US have to spend to stabilize the Middle East? Please be specific and, if you don't mind, explain how we'll pay for it. We already know it's not going to pay for itself and the players actually affected don't really want to chip in to cover the costs. 


So, saber rattlers, how much and where does the money come from?

DownInAlbany
DownInAlbany

@consumedconsumer Let me guess.  You didn't get the answer below that you were looking for by changing the subject for the third time?

td1234
td1234

@consumedconsumer So the other choice of continuous war in the ME alternative is fine with you? Allowing ISIS to take over the region and control the oil money from the region is fine with you?  

consumedconsumer
consumedconsumer

@DownInAlbany @consumedconsumer I'm not looking for any particular answer, sorry. Just an answer from those who are accusing Obama of cutting and running and not wanting to stay forever as we have in Germany, Japan and South Korea. 


Ain't nothing in this world free. So,  how much and where you going to get it? That, or STFU because you know we can't afford to be doing what we're doing there forever.


Oh, and I walked in on the Iraq sidetrack. The subject had already been changed. Guess you no longer want to harp on it since you can't answer the question. Figures.

td1234
td1234

@DownInAlbany It sure is. Progressives have a very difficult time facing reality. 


We (USA) is going to control the ME or ISIS or similar group is going to control the ME. 

consumedconsumer
consumedconsumer

@DownInAlbany LOL. Hittin' a nerve I see. Nothing was won. You bungled it from start to finish. And want to double down now. 

Paul42
Paul42

@DownInAlbany

From earlier:

"Seems you're stuck in the 50-year-ago paradigm of what it takes to win a war.


The US tried for years during the fighting to instill in the Iraqis a sense of country.  Not of tribe, not of loyalty to a person or imam, but of country.  There never was one because "Iraq" is a 90-year old creation whose borders were drawn by Western powers.

So, Philo, in order to 'win' it takes more than military body counts.  How do you propose to get those who live in the country to view themselves as Iraqis first, then to be willing to fight and die for it?

Because nothing else will bring enduring stability."

consumedconsumer
consumedconsumer

@td1234 What about all of our "allies" in the region and all the firepower they have (we sold it to them after all)? can't they do anything for themselves? And if We (USA) is going to control it - HOW MUCH WILL YOU PAY FOR THAT PRIVILEGE?

Paul42
Paul42

@td1234

Seems a limited, narrow, view of things.

You don't think Saudi Arabia, Bahrain, Jordan, UAE, etc have anything to say or do on the subject?

consumedconsumer
consumedconsumer

@td1234 aw, the poor Arabs can't fend for themselves and fight the little pis-ant collection of disaffected. 


there's been war in the ME since I was born. Doesn't seem like our 20-30 presence has done much of anything to change that now does it to you?

Paul42
Paul42

@td1234

Remember all those countries we went to war with in the past to keep them from imposing their will on other countries?

Sounds like if you'd have been born earlier, you'd have been on the side fighting against America.