Obamacare's 'Cadillac Tax' Will Soon Hit Many Cities and States

Robert Pozan reports:

Earlier this year, the US Supreme Court unanimously decided that a collective bargaining agreement should not be construed to provide workers with free healthcare benefits for life -- unless that agreement explicitly required the employer to pay all healthcare premiums for the lifetime of its employees. Instead, the Supreme Court declared, the healthcare benefits included in a collective bargaining agreement presumptively end when that agreement expires. As a result, local governments will have the opportunity to renegotiate their healthcare benefits with the public unions as their collective bargaining agreements end.

In these negotiations over the next few years, local governments should be very concerned about running afoul of the "Cadillac" tax. In 2014, government healthcare plans were 17.5 percent higher cost than the average citizen's plan, and their employee contributions were 45 percent less than the average plan, according to a survey of nearly 10,000 employers by United Benefit Advisors.

If these patterns continue, many state and city healthcare plans will run up against the "Cadillac" tax in 2018 - a 40 percent tax on the amount of total healthcare premiums (from employers and employees) exceeding $10,200 per year for individuals or $27,500 per year for families. In a 2013 letter, the deputy mayor for operations in New York City estimated that the Cadillac tax would cost the City $22 million in 2018, rising to $549 million in 2022. Similarly, the Association of Washington Cities, which offers a pooled plan to municipalities in Washington State, estimated that the "Cadillac" tax could increase local taxes by $76 million over the decade starting in 2018.

We can assure you, if ObamaCare isn't dismantled: some government workers who voted for Obama might become "less" happy with their health care plans.