Labor & Employment Law

Tax on Health Care Will Erode Coverage for Middle Class

By Tula Connell

A new year brings with it lots of hope.

Let’s hope 2010 brings a health care reform bill that does not penalize working families with a tax on their coverage. Because right now, as New York Times columnist Bob Herbert aptly describes it, there is a ”middle-class tax time bomb ticking in the Senate?s version” of the health care reform legislation.

The bill that passed the Senate with such fanfare on Christmas Eve would impose a confiscatory 40 percent excise tax on so-called Cadillac health plans, which are popularly viewed as over-the-top plans held only by the very wealthy. In fact, it?s a tax that in a few years will hammer millions of middle-class policyholders, forcing them to scale back their access to medical care.

Jon Walker at Firedoglake took a look at a report released in December by the Centers for Medicare and Medicaid Services, which found the health care tax “will result in most people getting worse health insurance from their employer, insurance that covers less.” Walker translates the report’s conclusions this way:

Your employer will reduce what your current insurance plan [covers] and put in place high co-pays and deductibles. The result is that many people with employer-provided health insurance will see their insurance get much worse. For younger, healthier employees, possibly getting less comprehensive insurance but maybe higher wages (I think it is very doubtful that there is a pure dollar for dollar passthrough), this might be a decent deal. For older, less healthy employees this is a very bad deal. They will be forced to pay much more out-of-pocket for their health care.

More cost, less coverage for working families. Yet portraying the tax as only affecting ”Cadillac plans,” purposely obscures how it will harm America’s working families. 

Or, as Herbert puts it:

The tax on health benefits is being sold to the public dishonestly as something that will affect only the rich….

Full post as published by AFL-CIO NOW BLOG on January 04, 2010 (boomark / email).