Can we discuss the Cadillac plan tax idea that Kerry proposed?

[beachmom]

There are people claiming the idea came from a Heritage Foundation paper. I have no idea. But here is a diary by TomP about the unions opposing the Senate bill.

http://www.dailykos.com/story/2009/12/18/816180/-AFL-CIOs-Trumka:-Current-Senate-Bill-Will-Die-in-the-House

I think the unions are looking out for THEIR interests, which is fine, but I am not going to go along with them here. Anyway, I did bring up the cadillac plans, but I am being flamed of course, because I think they should be taxed.

http://www.dailykos.com/comments/2009/12/18/61426/693/115#c115

But I think the friction here is actually the mark of a coalition that isn't going to see eye to eye on things. Truth is, union workers get better health benefits than their white collar workers at the same company. And, their balking at this tax makes me feel like they just don't want to pay and want someone else to pay.

Any insight would be great.

[Mass]

1. In theory, I understand the idea. In practice, there are way too many side effects.

and it is missing its goal. The thresholds are too low, and do not change with time, which means that they will touch more and more people.


Heritage Foundation wanted to tax every insurance benefit from the first dollar. The Golden plate tax was an idea to do that just for the higher incomes, on the assumption that only well-paid people would get insurances with premium that high, and with the idea that some of these insurances had useless items. Why not! The idea was also that the worker does not pay the tax, but the insurance company! (Uhm, how do you insure that they do not rise their prices to cover that, assuming this is still the case).

The problem is that the threshold are too low and the absence of reevaluation of these threshold in a time where insurances premium get up 8 % a year makes it another AMT problem in a few years. Everybody will eventually be taxed.

In addition, the bill is discriminatory, because small companies pay more for the same coverage than big companies, companies with older workers pay more, so it is once again risk adverse selection.

This is the issue with this bill. Sometimes, what seemed like a good idea at the beginning becomes a bad idea when you see how it plays with other provisions. The goal is to get people to get insured with a decent coverage. Not sure how increasing their costs is going to help reaching these goals.

[karynnj]

3. The stupid thing is that Baucus in his greed to get more revenue from this

killed the agreement Kerry had with the Unions. In the early articles, Kerry had socialized the idea with the unions and they agreed to not fight it - when the limit was $25,000. Kerry and Stabenow repeatedly argued with Baucus in the Finance hearings. (With Kerry even asking if he could have the offset that his MA connector idea would have for raising the threshold - after he finally persuaded Baucus that that would save money. As soon as Baucus agreed it would, Kerry immediately asked for that offset and Baucus rather annoyed said many others wanted offsets too. Kerry's persistence was great.)

[karynnj]

2. The idea was first proposed by Senator Bradley and Kerry in 1993

Like Kerry now, they had a threshold that was higher than the union contracts. The fact is that Heritage ATTACKED Kerry arguing it would hurt people with good plans. To me, this was like the "death tax" argument on "estate taxes. The fact is that the people hurt the most are - Heritage's favorite people - ultra wealthy executives with policies far higher than the $25,000 threshold Kerry argued for.

Here is my post from back when they did that-

They say that Kerry's plan will raise everyone's insurance because they ignore that he is not taxing the entire premium, but just the portion that is above some threshold. Their alternative - just to cap the amount that is taxfree would in fact do the same thing Kerry's proposal does, if you assume that the entire tax is paid by the policy holder.

They also very disingenuously say that it would apply just to private plans and not the public option. This is because they are again ignoring that Kerry's plan taxes only the amount above the average cost. The very design of the public plan means no public policies would be above the average cost. There is no intention of the public plan having gold plated options.

I hate to link to RW sources, but Heritage garbage tends to become talking points - and here they are intentionally wrong.
http://www.heritage.org/Research/HealthCare/wm2561.cfm

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=273&topic_id=158443&mesg_id=158447

[karynnj]

4. I need to leave, but there are good links in the thread I included in my other post here

I couldn't find the Heritage Foundation claim - but they clearly blasted Kerry for his proposal. The OP article also points out that he worked with the unions. He fought to raise that limit back to $25,000 as hard as anyone.

But, as you point out - even $25,000 is slightly less than twice the typical premium cost. The point is NOT that they can't have it, but that they can not have that big a tax free benefit. The fact is many people, without cadillac plans use some taxed dollars to pay their copays or even premiums right now. They are fortunate to have the good plans.

I still think that this is like the threat to "family farm" argument on the estate tax.

[beachmom]

5. I am not going to go back into the thread, as I am being attacked

as either not being a member of the Dem party or that I am a socialist. You just can't get a civil conversation over there. So forget it.

[karynnj]

6. Ok - this time I agree with you on not intervening

was it Tom P who argued it was Heritage? If so, I will post the link where they blasted it, because he is usually a good guy and from MA.

[beachmom]

8. No. Although I disagree with TomP quite a bit, he's a good guy

and is not abusive. He disagreed with me but in a civil manner. However, he did rec some of the other comments but I am not sure which ones. It's all under the comment thread I linked to in the OP.

[sandnsea]

7. Oregon passed a 1% tax on all premiums

plus a hospital tax. The premium tax is going to expand children's health insurance and I don't recall a whole lot of outrage on it, just typical tax opposition. The hospitals said they would get more in additional state payments than the tax would cost them but I don't remember how that works. I think that one was more controversial, tax hospitals?? But it passed.

[MonteLukast]

9. How has it worked so far? (n/t)

[sandnsea]

10. It just passed last year

We have so many problems in this state, it's hard to know what is working and what isn't. No hospitals have closed and I haven't heard any threats of throwing people off their health program recently. So I guess we're doing okay there. They want to raise our $10 corporate tax in a special election in January, and a tax on those making over $250,000. That's to go to education which is not doing okay. That's being opposed with job loss threats. Funny thing about education, they went to a school to work model in the 80s which is when national scores really started to plummet. But they can't seem to make that connection.