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'Cadillac' tax on generous health plans draws union, employer ire

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The International Longshore and Warehouse Union is breaking from the AFL-CIO, which it accuses of supporting a 40 percent tax on generous health plans. (AP)

The International Longshore and Warehouse Union is so angry over the so called "Cadillac" tax, which proposes a 40 percent levy on generous health plans, it is breaking from the AFL-CIO, which it accused of supporting the measure.

And the San Francisco-based ILWU isn't alone in its concern over the tax, which takes effect in 2018 and is pushing employers to change their insurance offerings.

Helen Darling of the National Business Group on Health, which represents 265 large employers, says the coming tax "is a big, big factor. Every employer as soon as the law was signed said we're not going to pay the Cadillac tax."

The threshold for the Cadillac tax is about $10,000 for individuals and more than $27,500 for families. Both expensive union plans and new benefits required by ObamaCare are pushing costs in that direction.

So employers are cutting costs by moving toward less expensive, high deductible plans.

"They might be a high deductible and a higher deductible, says Darling.

Jim Capretta of the Ethics and Public Policy Center explains "they have a deductible that could be $3,4,5 thousand. And below that the consumer's responsible for the expenses. Now they're often coupled with what is known as health savings accounts."

John Goodman, a longtime proponent, is sometimes called the father of health savings accounts. He explains that with such accounts "the employee controls a lot of the money, makes a lot of his own decisions."

He says that saves money because, as he puts it, "we're always more careful when we're spending our own money than when we're spending someone else's money."

He also adds that is the system that Whole Foods uses for all its employees.

"They're all managing part of their own health care dollars," Goodman says. "Every two years or so the employees can vote if they want to go back to the old HMO way or some other form of insurance, they can do that. But, the plan they have they like, it works well for them and it saves money."

It appears other workers and unions need to get used to the system as well because it's the fastest growing area of insurance.

Some 72 percent of large employers offer at least one high deductible plan. And for more than a fifth of employers, that is the only plan available -- all aimed at avoiding the Cadillac tax.

"So think of that as the sword of Damocles," says Darling, “because it's going to be a whopping tax on anyone who has not controlled their cost very significantly."

New York City officials confirm that, saying with current union health benefits, the city would pay more than half a billion dollars in Cadillac taxes in 2022.

That means either the unions have to accept far less in coming contracts, or the taxpayers are going to face a huge bill.

 

Jim Angle currently serves as chief national correspondent for Fox News Channel (FNC). He joined FNC in 1996 as a senior White House correspondent.

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