Politics Daily: Cadillac Tax Would Hit Hard
December 17, 2009
Politics Daily looks at the effects of the so-called "Cadillac tax" included in the Senate health care bill. Originally intended as a way to finance reform by taxing the type of expensive benefit plans enjoyed by Wall Street executives, studies show it would hit a lot of middle-class Americans -- and likely result in drastic cuts to health benefits.
Beth Umland, the research director for the Mercer employee benefits consulting firm which released a widely-read study on this tax last week, says the impact would be felt across the board.
"Plans that trigger the excise tax are not necessarily generous plans," she said. "Small employers offer significantly less-generous plans than large employers, but just as many small employers are going to trigger the tax." Plans for workers in dangerous professions, like steelworkers, also have higher-cost plans because they experience more work-related health problems.
Unlike the Senate bill, the plan passed by the House pays for health reform with a surtax on people making more than $500,000, and House Democrats like Rep. Joe Courtney (D-CT) are determined to remove the Cadillac tax when the legislation goes to conference committee.
A senior Democratic House aide said this week that the choice by the Senate to pay for health care reform with an excise tax that could hit middle-class workers, as opposed to the choice of the House to tax the highest earners, represents a fundamental philosophical difference between the two chambers that could endanger the entire bill if it is a part of the final conference report.
"It would be a mistake to assume that we're just going to rubber-stamp what the Senate sends us," Courtney said. "All of us are going to be on the ballot in 2010. It certainly raises a big, red flag for people who are going out be campaigning soon."
