As you may know, starting in 2018, ObamaCare will tax insurance policies that are deemed “Cadillac” plans. It will do so by taxing “excess” premiums – i.e. premiums that are in excess of the Federally mandated level. The tax rate will be up to 40%.
For example, the limit for an individual policy in 2018 will be $10,200 in premiums payed. Let’s say an employer pays 2/3 of the employee’s coverage and the total premium payed is $18,000 – 12K by the employer and 6K by the employee. The tax on the employer will be $720 (40% of the “excess” premium of $1,800).
The problem is that the rise in premiums has been reported as from 18 to 50 percent so far – only one year into implementation. If this were to continue year over year, premiums could rise a whopping 200% to 500% by the time 2018 rolls around! This means that individual plans that are now valued at about $2500 could exceed the “Cadillac” limit before we even start levying the taxes in 2018! The number of affected individuals and families could be staggering.
To avoid a catastrophe, Congress may need to change these limits, but this doesn’t help ObamaCare’s solvency and doesn’t address the underlying issue – ObamaCare seeks to control Federal expenditures, such as those for Medicare and Medicaid, but does little to control actual costs. Since premiums reflect costs (especially under the ObamaCare scheme), they will continue to rise above the “Cadillac” limits wherever they may be set.
At a more basic level, why is there a judgment that a certain amount of insurance is “excess,” or “Cadillac?” Why wouldn’t our Government want an employer to obtain the best possible coverage for its employees? In a rational world, wouldn’t it make sense to have a tax break for part of the cost of health insurance rather than a tax penalty? Wouldn’t this encourage people to get coverage more effectively than a toothless “mandate?”
The problem is the word “rational.” We are dealing not with just health care, but with ideology. Those who framed the ACA sincerely believe that there is only so much health care to go around, and that you should not get more than your “fair share.” “Fair share” may eventually be expanded to your lifetime – as in “You have already received your fair share of health care, and we are not going to provide you with any more.” In effect this is the ‘complete lives’ theory advanced by many Government controlled health care advocates, including Mr. Obama’s advisor Dr. Ezekiel Emanuel.
Buckle your seat belts folks, we’re in for a bumpy ride.