Among the Affordable Care Act’s many features is a tax on high dollar health insurance coverage that is part of an individual’s employment compensation. The thinking is that someone who is self-employed or doesn’t have employer provided coverage pays for health insurance with after-tax dollars so it isn’t fair that others should get this in-kind, untaxed income. But employers find it is better to compensate through generous and untaxed health care packages. Labor unions, likewise, negotiate generous health care coverage as part of their members’ contract.
So Obamacare, as passed, provides for a tax on the so-called "Cadillac plans.” And, of course, those who are about to be gouged (the tax becomes effective in 2018) are not happy about it. That includes providers of the plans since they will suffer as there will be less incentive to buy lavish coverage when it is no longer a way to avoid taxes.
So, as Sarah Ferris of The Hill reports:
A coalition of K Street health giants are [sic] teaming up to fight the ObamaCare tax on high-cost insurance plans known as the “Cadillac tax.”
… newly launched campaign, called the Alliance to Fight the Forty, includes more than a dozen pharmaceutical companies, insurance plans and unions including Pfizer, Blue Cross Blue Shield and the Laborers International Union.
The tax is scheduled to take effect in 2018 so the Knights of K-Street have time enough, probably, to work over the vulnerable in congress.
The argument for the tax of 40 percent on plans costing $10,200 for individual coverage and $27,500 for family coverage has been to raise revenue to pay for the other parts of the bill. Those subsidies, for instance, for people who might not otherwise be able to afford any coverage.
The way the debate is shaping up:
ObamaCare supporters argue [the tax] impacts only the wealthiest Americans. But Republicans, and a growing number of Democrats, argue that the tax also hits middle-class families in areas where healthcare costs are higher, such as New England and the West Coast.
So we shall see if, as is almost always the case, Washington finds it is easier dispense benefits and subsidies than to impose taxes sufficient to pay for them.