taken from the Cape & Plymouth Business magazine
Study: Obamacare tax to hit middle class in Mass.
Published on Thursday, October 11, 2012
STATE HOUSE (MA) NEWS SERVICE
While the Affordable Care Act might have taken its inspiration and ideas from the groundbreaking 2006 health care reform law in Massachusetts, the Bay State will not be exempt from some of the costs associated with the federal law.
An excise tax on so-called "Cadillac" insurance plans is set to take effect in 2018 and could wind up costing middle class workers, such as small business owners, police officers and teachers, according to a study released by the Pioneer Institute on Wednesday.
"[What] ended up in the final law is less of a 'Cadillac tax' and more of a 'Ford tax,'" wrote the study's author, Josh Archambault. The federal law passed in 2010 levies a tax on sponsors of self-funded group health insurance plans and health insurance issuers that would kick in for individual plans exceeding $10,200 and family plans exceeding $27,500, the study said.
According to Pioneer, that could translate to costs of $86,905 over 10 years for a small business owner with three or more full-time employees, $53,907 for a police officer over that same time period, and $20,807 for a teacher over that period.
The Congressional Budget Office has also looked into the implications of the so-called "Cadillac" health plan tax, and estimated the federal government would collect $11 billion in revenue from the tax in 2018.
Pioneer's data on the potential costs to the insured is in contrast to data released in a recent Families USA study that found the ACA, or Obamacare, will provide more subsidies to help families buy insurance and will cap out of pocket spending.
Massachusetts AFL-CIO President Steven Tolman acknowledged that his members are not happy about the upcoming tax but said the benefits of Obamacare outweigh the trade-offs.
"It is one of the compromises that they had to make in order to get the good parts of the bill," Tolman said. He said, "We recognize the importance of compromise; we're not happy about it."
Other elements of the omnibus federal health care law make the new tax worth it, Tolman said.
"The most important part of Obamacare is the preexisting conditions. The fact that an insurance company can no longer deny you coverage, that outweighs everything in my book," Tolman said. He said the ability for children to stay on family plans until they turn 26 was also a benefit that outweighs the tax.
According to Archambault, the Cadillac tax could affect more than people with luxury plans because health insurance costs in Massachusetts are already higher than most other states.
"Over time, if insurance costs are not significantly contained, most of the working population in Massachusetts will pay this tax," the study says. The state is aiming to reduce the rate of health insurance increases with this summer's passage of an omnibus health care law some dubbed "health care 2.0."
While he acknowledged that there was displeasure felt toward the tax, Tolman also called it a "wedge issue" and pointed out that it would not go into effect for another six years.
Pioneer cited a Sept. 13 Commonwealth Health Insurance Connector Authority presentation, which he said shows the state will need to make at least 124 steps to have the already existing connector approved by the federal government.
"Conventional wisdom is that healthcare in Massachusetts will not change significantly under the federal Patient Protection Affordable Care Act," Archambault wrote, continuing, "However, a careful review of the law reveals that many big changes are ahead for the Commonwealth."
