WHEREAS:
The Affordable Care Act has been in place for six years and only one major provision has yet to take effect - the 40 percent excise tax on high cost health plans; and
WHEREAS:
The implementation of the tax was recently pushed back by Congress from 2018 to 2020; and
WHEREAS:
In 2020, all employer health plans with costs above certain thresholds must pay this 40 percent tax. The ACA's 2018 thresholds are $10,200 for single coverage and $27,500 for family coverage with adjustments made each year based on general inflation; and
WHEREAS:
Additional adjustments are available for pre-Medicare retirees and plans covering certain high-risk job classifications; and
WHEREAS:
The law provides adjustments to the thresholds that will not adequately account for many of the factors that increase health costs. Estimates for general inflation are 2.4 percent a year over the next decade while the estimate for the increase in private health care spending is an average of 5.8 percent each year. Because of this difference between general and medical inflation, more plans will owe the tax each year; and
WHEREAS:
The stated intent of this tax was to target overgenerous health plans. But a health plan that provides services to keep people healthy and treat them when they are sick is not a “Cadillac” plan. Research has shown that over time, the tax will affect a majority of health plans offered by employers, punishing not only high-paid executives but working families; and
WHEREAS:
Health plan premiums are rising largely due to the increasing cost of medical care and this tax does nothing to control health care costs. Many factors influence the cost of health care, but most are not within a covered individual’s control; and
WHEREAS:
The Milliman actuarial firm's analysis of this tax found it is likely to be a tax based on factors other than a plan’s level of benefits and beyond the control of health plan members. Uncontrollable factors that drive up plan premiums include a health plan participant’s age, gender and where they live. This analysis found that the factor affecting the cost of coverage the most is where plan participants live – which is not addressed by the law at all; and
WHEREAS:
The tax will shift more costs onto workers through reduced benefits and increased out-of-pocket costs. Too many working Americans are already struggling to pay for their health care needs. Workers’ health plan deductibles have risen almost seven times faster than their wages since 2010; and
WHEREAS:
Large deductibles and upfront costs are blunt instruments. Research has shown that large upfront costs lead plan participants to cut back on both unnecessary and necessary care. This could lead to higher health plan costs and reduced quality of life; and
WHEREAS:
The two-year delay of this tax only provides temporary relief to the millions of Americans who get their health care coverage through their job; and
WHEREAS:
The ACA’s excise tax on high-cost employer-sponsored health coverage threatens this coverage. This tax will harm health plans of all types of employers and a wide range of employees, including a large number of health plans covering AFSCME’s membership in 2020 or soon thereafter.
THEREFORE BE IT RESOLVED:
That AFSCME and its affiliates will continue to oppose this harmful tax; and
BE IT FURTHER RESOLVED:
That AFSCME and its affiliates continue efforts to repeal this deeply flawed tax.
SUBMITTED BY: Todd Singer, President and Delegate
A. Jane Gill, Secretary and Delegate
AFSCME Council 13
Pennsylvania