Obamacare’s Cadillac tax is a looming drag on county governments

A 40 percent tax on the value of high-value employer-provided health coverage could force some counties to pass the added cost on to workers and taxpayers.

Americans are more divided than ever, but if there’s one thing we share it is worry about the health of our families and how to pay for health problems that may arise.

More than half of us (57 percent) have employer-provided insurance, and it’s one of the top reasons we value our jobs.


Here in Fresno County, we are worried about the impact of rising health care costs on our employees and our county budgets, as well. Health care coverage is one of the primary benefits counties use to attract and maintain a quality workforce.

And yet, the bedrock security of employer-provided insurance is being threatened by a tax that is lurking right around the corner. This looming tax is driving up health care costs that local governments can’t afford to pay.

The Cadillac tax is a 40 percent tax on the value of employer-provided health coverage that exceeds certain amounts, estimated to be $11,100 for individuals and $29,750 for families when it is scheduled to take hold in 2022.

Insurance provides security in knowing that if a health concern arises, our families are going to be taken care of. It offers peace of mind that the cost of taking care of the issue is not going to keep us up at night, though worry about our loved ones just might. That is why Americans prefer high-quality benefit packages over higher take-home pay nearly 2 to 1.

In the rush to approve the Affordable Care Act in 2010, the Cadillac tax was put in place with the intention of reining in generous health care benefits seen as contributing to the high cost of health plans.

But a lot has changed in 10 years. Now, health status, geography, and demographics that are the primary drivers of health plan costs.

As local governments continue to struggle to bounce back from the Great Recession, they can’t weather additional budgetary challenges. We would have to pay the 40 percent Cadillac tax, but the extra costs will be passed onto workers and eventually taxpayers.

Counties are already preparing to deal with the excise tax now, even though it is not set to take effect until 2022. Some of the options include dramatically raising deductibles or significantly reducing benefits. These are tough choices that no employer wants to make.

Unfortunately, because the tax grows over time, at some point the tax could put pressure on counties to raise county taxes and fees just to pay for this federal tax obligation.

This isn’t about making rich people pay their fair share. The Cadillac tax is more likely to penalize older workers, women, people with families, and employers who provide benefits to part-time employees.

All of these categories are represented in typical county employees, who are dedicated to serving their communities and forego private sector salaries to do so, but who also value the security of comprehensive health coverage.

Across the country there are 3.6 million county employees that serve over 308 million county residents. Here in Fresno County, there are more than 8,500 employees and 15 cities, many of which are classified as rural or underserved communities.

We want to be able to offer our employees access to affordable health care coverage.

We need to stop the Cadillac tax effort that will undermine the ability of counties to hire the best workers to keep us and our children thriving and safe.

The health of our communities is at stake.

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