Author Interviews, Cost of Health Care / 14.03.2016
Health Care Plan ‘Cadillac Tax’ Will Affect Mostly Middle Class Employees
MedicalResearch.com Interview with:
Steffie Woolhandler MD, MPH, FACP and
David U. Himmelstein MD, FACP
CUNY School of Public Health at Hunter College
MedicalResearch.com: What is the background for this study? What are the main findings?
Response: The Cadillac Tax aims to eventually eliminate tax subsides to employer-sponsored coverage. When an employer provides health benefits to an employee, the employee pays no income or FICA tax on the value of those benefits, although the benefits are obviously part of the employee's compensation. In other words, the taxpayers are currently picking up part of the employee's health insurance costs.
Economists and politicians have been justifying the ACA's Cadillac Tax by portraying it as a "Robin Hood" tax that would take from the rich and give to the poor. That view of the Cadillac Tax is untrue. We found that the main beneficiaries of the current tax subsidies to employer sponsored coverage are middle class families (defined by a family income between $39,000 and $100,000 in 2009 dollars) for whom the subsidies boost their effective income by about 5%. These middle class people are the ones who would be most harmed when the Cadillac Tax kicks-in and curtails the current tax subsidies.
(more…)