Unions Discover the Cadillac Tax

State and local governments across the country tend to offer more expensive health plans than private businesses do, and workers often accept smaller wage increases to retain their benefits. Because of this, state and local government employees are expected to be disproportionately represented among those whose plans will be subject to the tax.

Jonathan Gruber, an economist at the Massachusetts Institute of Technology who was a paid consultant to the Obama administration on health care policy, said forcing state and local governments to rein in health care costs was exactly what the tax was intended to do.

“This is intended to shift compensation away from excessively generous health insurance toward wages,” he said. (New York Times)

Comments (11)

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  1. Buster says:

    If the Administration wanted to rein in medical spending why didn’t it impose the tax on all health plans above a high-deductible plan?

  2. Kurt says:

    “This is intended to shift compensation away from excessively generous health insurance toward wages,”

    -Tax$, Tax$, Tax$

  3. William says:

    “He worried that the tax was “a blunt instrument that could too easily become a bargaining chit for cutting back benefits of workers.””

    Thats another take on it

  4. Wallace says:

    If the union workers want less wages and more benefits who is the government to tell them no?

  5. Afton says:

    “the Cadillac tax would cost New York City $22 million in 2018, increasing to $549 million in 2022.”

    Big increase if they don’t deal with it

    • Bolton says:

      For context:

      “This year, the total city budget, excluding federal and state aid, is just over $50 billion.”

  6. Howard says:

    Everyone blames each other, states blame the administration, the administration blames the states. Maybe someday they will work on less blame and more gain.

  7. Randall says:

    More taxes and more spending!!!! When will it ever be less taxes and less spending?

  8. Don Levit says:

    As I recall, the cadillac tax starts around $10,000 per year for an individual and $27,000 a year for a family.
    It seems fair to me to tax such exorbitant premiums.
    Paying over $27,000 a year for a family for medical premiums – I wonder how that compares to their employer’s contributions toward retirement?
    Don Levit

  9. Dr. Steve says:

    If there is a desire to shift compensation and wage balance then make ALL benefits to employees taxable income. It is an inexcusable discrimination in the tax code anyway. Better still maybe employee benefits will go away, period.
    Work for pay and determine what priorities you want in your own life.
    And before someone jumps on me for not “caring” I anticipate wages or salaries will rise and companies offering products like insurance will become more competitive in price and product in a free market.
    Oh, I forgot, this nation no longer believes in a free market. Never mind.