Some people have plans that are more generous than Federal Blue Cross, real "gold plated" plans. Often these people are quite wealthy, but they may have the great plans through their union contract.
The more serious issue is that the level is not (at least as part of this bill) adjusted for inflation, so eventually a large percentage of plans could be covered by this tax.
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...Who has high-premium plans?
In the health bill passed by the Senate, a high-premium health plan is defined as costing more than $8,500 for an individual or $23,000 for a family. The cost includes health and dental benefits, along with worker and employer contributions to flexible spending or health savings accounts. In an analysis released Nov. 30, the Congressional Budget Office predicts that in 2016, 19 percent of workers who have insurance through the workplace would fall under that category...
kaiserhealthnews.org
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...As it turns out, though, many smaller fish would get caught in Mr. Baucus’s tax net. The supposedly Cadillac insurance policies include ones that cover many of the nation’s firefighters and coal miners, older employees at small businesses — a whole gamut that runs from union shops to Main Street entrepreneurs.
Under the Baucus plan, insurers selling a plan costing more than $8,000 for an individual and $21,000 for a family would have to pay a 35 percent excise tax on the excess amount.
Although the national average premium is currently $13,375 for a family policy, according to the Kaiser Family Foundation, many are much higher than that — particularly in high-cost parts of the country.
Nationwide, about one in 10 family insurance plans would be subject to the new excise tax, according to the Center on Budget and Policy Priorities, a liberal-leaning policy and research group.
The tax would be levied on insurers — or on employers that act as their own insurers. Either way, the tax would very likely be passed along to workers in even higher premiums than they pay now. But if insurance premiums continue to rise faster than inflation, as they have for years, many more people’s policies could end up setting off the luxury tax in coming years.
“It puts a bigger tax on middle-income Americans who are already paying enough,” said Harold A. Schaitberger, the general president of the International Association of Fire Fighters. The union says some of its members around the country are in plans that would be subject to the tax.
People who live in high-cost areas, like the Northeast or California, would also have a greater risk that their insurance plans would set off the excise tax — not because the coverage is particularly generous, but because the price of their policies reflects the higher medical costs where they live. Massachusetts residents, for example, tend to pay more than a quarter more in premiums, on average, than people living in Idaho...
...Proponents say the tax is squarely aimed at the very richest plans — like the family coverage offered to the 400 or so managing directors at Goldman Sachs and its top executive officers. It carries a premium of around $40,000 a year. The Goldman plan would be subject to nearly $7,000 in taxes. Goldman Sachs declined to comment.
Even if most employees around the nation might initially escape, experts say more people’s insurance plans would cross into the taxable range in future years. If the inflation rate in premiums continues its pace of the last 10 years, even the average cost of family coverage would probably cross the threshold within a few years of the tax’s going into effect.
“That number is going to grow and grow and grow,” said Marissa Milton, a health care policy analyst for the HR Policy Association, which represents large employers’ benefit managers.
Ms. Milton drew a comparison to the alternative minimum tax — a tax modified in 1986, supposedly as a way to keep affluent people from using deductions to avoid paying taxes. In reality, it has ended up capturing more and more middle-class taxpayers, Ms. Milton said. Likewise, the insurance excise tax “is going to affect a lot of families,” she said.
By his own calculation, Robert G. Hansen, a business professor at Dartmouth, is one of the Americans who might be considered to have luxurious coverage, because the cost of his benefits could easily top $25,000.
But that supposedly “gold-plated coverage,” he said, includes the cost of related benefits, like dental coverage and the money in his flexible spending account — all of which would be subject to the excise tax.
And who will pay the $1,450 in additional taxes Mr. Hansen would incur? “In the end, look in the mirror,” he said.
“It’s the worst kind of economic engineering,” he said. “You end up with something that looks like the I.R.S. code.”
Small employers would also probably be hit by the taxes — and, again, not because they offer overly generous coverage. Instead, small businesses tend to pay more for their insurance than bigger employers that can negotiate better premiums. And because they do not have large pools of workers to help spread the risk, small employers tend to pay even higher amounts if they have older or sicker workers.
About 14 percent of small employers, counted as those with fewer than 500 workers, now offer policies that would be subject to the excise tax, said Beth Umland, director of research for Mercer, a consulting firm that conducts an annual survey of employee benefits. That compares with just 5 percent of large employers with 500 or more workers.
“That is a very heavy hammer on the cost of your premiums,” said Donna Marshall, the executive director of the Colorado Business Group on Health, which represents employers of all sizes in that state. “You don’t want to cause a chilling effect on the employers who are trying to do the right thing.”
Even union plans, which tend to offer the most generous coverage, are expensive because they frequently cover a number of older workers or some who retired early and have not yet reached Medicare age. Jim Hoffa, president of the Teamsters union, warned that the middle class, not the rich, would bear the brunt. “It taxes the wrong people.”
nytimes.com |
