A coalition of labor unions and health insurance companies is pushing Congress to repeal ObamaCare's "Cadillac tax," arguing that it will hurt workers by causing their employers to cut back, or eliminate, insurance coverage.
But many economists and analysts argue that whatever the workers lose in coverage they will largely make up in additional wages or benefits.
"The economic evidence is strong that there is a tradeoff between health benefits and wages, so I would expect wages on average to rise as firms cut back on health benefits as a result of the Cadillac plan tax. The wage effect could vary by employee and employer, though, depending on labor market conditions. Workers whose skills are in greater demand will be more likely to get wage increases," said Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation.
The Affordable Care Act, or ObamaCare, includes a 40 percent tax on employer-provided plans with supposedly lavish benefits, i.e., "Cadillac" plans. The White House's intention was to use the tax revenue from the wealthier plans — estimated by the Congressional Budget Office at $87 billion over 10 years — to finance other parts of the law. However, many of the plans were negotiated by labor unions and are a key benefit for members. They fear the tax will cause employers to drop or scale back the plans rather than pay the tax.