How Good Is Your Insurance? ‘Cadillac Tax’ Looms for Large Employer Health Plans
While most companies expect health care cost increases to hold steady next year, nearly half of large employers say that if they can’t find new ways to cut costs, they’re going to cross the “Cadillac tax” threshold in 2018, according to a new study by the National Business Group on Health.
Passed as part of the Affordable Care Act and going into effect in 2018, the Cadillac tax will hit employers whose plans cost more than $10,200 for an individual or $27,500 for a family. The employer will have to pay a 40 percent tax on the cost of each plan above those levels.
Among the companies surveyed, 48 percent said that at least one of their benefit plans would trigger the Cadillac Tax. By 2020, 72 percent of employers say one of their plans will trigger the tax, and 51 percent say their most popular plan will be subject to the tax.
Related: Obamacare’s Cadillac Tax Hits the College Campus
“The need to control rising health care benefits costs has never been greater,” NGBH President and CEO Brian Marcotte said in a statement. “Rising costs have plagued employers for many years and now the looming excise tax is adding pressure.”
Employers expect keep benefit costs increases to 5 percent this year by pushing more costs onto workers via consumer-directed health plans (76 percent) and expanding wellness initiatives (70 percent).
None of the 425 employers surveyed said they planned to eliminate their health care coverage, but nearly a quarter said they’d consider offering employees a private exchange.
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Tweet of the Day: The Black Hole of Big Pharma
Billionaire John D. Arnold, a former energy trader and hedge fund manager turned philanthropist with a focus on health care, says Big Pharma appears to have a powerful hold on members of Congress.
Arnold pointed out that PhRMA, the main pharmaceutical industry lobbying group, had revenues of $459 million in 2018, and that total lobbying on behalf of the sector probably came to about $1 billion last year. “I guess $1 bil each year is an intractable force in our political system,” he concluded.
Warren’s Taxes Could Add Up to More Than 100%
The Wall Street Journal’s Richard Rubin says Elizabeth Warren’s proposed taxes could claim more than 100% of income for some wealthy investors. Here’s an example Rubin discussed Friday:
“Consider a billionaire with a $1,000 investment who earns a 6% return, or $60, received as a capital gain, dividend or interest. If all of Ms. Warren’s taxes are implemented, he could owe 58.2% of that, or $35 in federal tax. Plus, his entire investment would incur a 6% wealth tax, i.e., at least $60. The result: taxes as high as $95 on income of $60 for a combined tax rate of 158%.”
In Rubin’s back-of-the-envelope analysis, an investor worth $2 billion would need to achieve a return of more than 10% in order to see any net gain after taxes. Rubin notes that actual tax bills would likely vary considerably depending on things like location, rates of return, and as-yet-undefined policy details. But tax rates exceeding 100% would not be unusual, especially for billionaires.
Biden Proposes $1.3 Trillion Infrastructure Plan
Joe Biden on Thursday put out a $1.3 trillion infrastructure proposal. The 10-year “Plan to Invest in Middle Class Competitiveness” calls for investments to revitalize the nation’s roads, highways and bridges, speed the adoption of electric vehicles, launch a “second great railroad revolution” and make U.S. airports the best in the world.
“The infrastructure plan Joe Biden released Thursday morning is heavy on high-speed rail, transit, biking and other items that Barack Obama championed during his presidency — along with a complete lack of specifics on how he plans to pay for it all,” Politico’s Tanya Snyder wrote. Biden’s campaign site says that every cent of the $1.3 trillion would be paid for by reversing the 2017 corporate tax cuts, closing tax loopholes, cracking down on tax evasion and ending fossil-fuel subsidies.
Read more about Biden’s plan at Politico.
Number of the Day: 18 Million
There were 18 million military veterans in the United States in 2018, according to the Census Bureau. That figure includes 485,000 World War II vets, 1.3 million who served in the Korean War, 6.4 million from the Vietnam War era, 3.8 million from the first Gulf War and another 3.8 million since 9/11. We join with the rest of the country today in thanking them for their service.
Chart of the Day: Dem Candidates Face Their Own Tax Plans
Democratic presidential candidates are proposing a variety of new taxes to pay for their preferred social programs. Bloomberg’s Laura Davison and Misyrlena Egkolfopoulou took a look at how the top four candidates would fare under their own tax proposals.
