The Senate's tax would initially apply to all individual policies costing more than $8,000 a year, or $21,000 for a family. Those thresholds are to be indexed to the overall consumer price index (CPI) plus 1 percent. Problem is, medical costs and health insurance premiums increase a good deal more than the overall CPI. Since 2000, they have risen three to four times faster -- which means, more policies will be subject to the tax with each passing year. The congressional Joint Committee on Taxation has calculated that in 2013, when the reforms kick in, the tax will apply to 19 percent of individual plans and 14 percent of family plans, but that by 2019 it will sock 34 percent of individual plans and 31 percent of family plans.Meyerson says "sock", but the actual language of the JCT report is "impact." That's a really important distinction. JCT doesn't expect the excise tax to actually apply one third of all plans, as Meyerson implies.* It estimates that 80 percent of the revenue raised by the proposal would come from income and payroll taxes on higher wages that result from employers switching to cheaper health care plans and moving the savings into higher wages. That's why its tethered to CPI rather than health inflation: To slowly extend the incentive for employers to buy cheaper care.
Meyerson is right that this will extend the tax beyond Cadillac plans. He's right that Americans might reject this tax creep, and unions especially will be peeved to know their hard fought benefits might come under attack. He's right that employers might switch to cheap plans and pocket the savings themselves. After all, if health care inflation has been so devastating, why haven't they done this already? Like so much with health care reform, we're living on assumptions. But let's at least be honest about the assumptions. The excise tax is designed to raise the vast majority of its money over time by encouraging your employer to pay you higher wages -- and taxing those wages to pay for reform.
*Re-reading Meyerson, I don't think I gave him enough credit. He introduces, then argues against, the assumption that the excise tax would move more compensation into wages. I think our main differences are of emphasis rather than understanding.
Meyerson is a union mouthpiece, a shill for the AFL-CIO. He is simply spouting the talking points sent to him by his union masters. They oppose the cap on the tax exemption for employer-provided health care, but the political situation prevents them from coming right out and saying so. Hence, they attack it indirectly--it won't tax just "Cadillac" plans--and this is Meyerson's way of following their orders. The man hasn't had an original idea in forty years.
Clearly, not the whole amount of any health insurance premium savings (if they indeed materialize) will go straight into salaries. There are payroll tax considerations, the employer matching of roughly 7.65% for Social Security and Medicare), as well as possible increases in workers comp insurance (wage based as well), and the pension contribution - at least the employer matching if the employee isn't capped out yet - would definitely be a factor in the amount (if any) that goes to the employee.
At best, on a $1,000 premiuum "savings" the employee might get $850 seeing as $65 goes to additional payroll taxes and say $85 to the employee pension matching of 10% of gross. And I know some employers that put back 25% of their employee's gross, so the actual amount would be lower.
Lower still if the employer wanted to keep a little bit of those "savings" for when the savings disapear.
We seem to allow the some 500 or so folks in DC to decide what the other 300 million of us are thinking or what we're going to do.
Or, the employer could outsource more of the jobs, and get rid of the high-salaried union employees, their unaffordable pensions, their gold-plated health plans, and the ObamaCare tax.