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Why the Cadillac tax may be working as intended


When it comes to the Affordable Care Act, the Cadillac tax--which places a 40 percent tariff on individual plans that cost more than $10,200 a year and family plans that cost more than $27,500 starting in 2018--is one of the most controversial segments of the law.

But while Senate Republicans have filed legislation to repeal the tax, it's possible the provision may be working, reports Real Clear Politics.

During a labor agreement meeting between the United Auto Workers and Fiat Chrysler Automobiles this month, the union agreed to "find new areas of opportunity to reduce cost" if it's needed to stay below the tax threshold, even if that means charging higher deductibles, notes the article.

The union also proposed an unusual amount of labor-management collaboration to address rising healthcare costs, and "to explore innovative ways of improving the delivery of negotiated healthcare benefits in a manner that increases quality, lowers cost, produces less waste and provides better patient care."

So as Real Clear Politics points out, the Cadillac tax not only is working as intended, but also introducing a new urgency to rein in costs.

"The excise tax has gotten companies as well as employees and others who represent them, like unions, thinking, hey, we need to work together," Steve Wojcik, vice president for public policy at the National Business Group on Health, tells the publication. "The excise tax has brought this to the fore, a focal point for action."

Still, the tax has plenty of opponents, many of which have organized into a group called the Alliance to Fight the 40, which aims to drum up support for the provision's repeal. Health insurer Cigna is among the group's members.  

To learn more:
- here's the article
- here's the proposal

Related Articles:
GOP lawmakers gear up to fight Cadillac tax
Cadillac tax--whether repealed or implemented--will affect insurers
How the Cadillac tax will impact the entire industry