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Public Sector Union Workers Fight ‘Cadillac Tax’

From an irony proof New York Times:

Health Care Law Raises Pressure on Public Unions

By KATE TAYLOR | August 4, 2013

Cities and towns across the country are pushing municipal unions to accept cheaper health benefits in anticipation of a component of the Affordable Care Act that will tax expensive plans starting in 2018. 

The so-called Cadillac tax was inserted into the Affordable Care Act at the advice of economists who argued that expensive health insurance with the employee bearing little cost made people insensitive to the cost of care…

Cities including New York and Boston, and school districts from Westchester County, N.Y., to Orange County, Calif., are warning unions that if they cannot figure out how to rein in health care costs now, the price when the tax goes into effect will be steep, threatening raises and even jobs…

But some prominent liberals express frustration at seeing the tax used against unions in negotiations. “I think it was misguided all along,” Robert B. Reich, the former labor secretary, said in an e-mail. When the law was being written, he said, he worried that the tax was “a blunt instrument that could too easily become a bargaining chit for cutting back benefits of workers.”

“Apparently, that’s what it’s become,” Mr. Reich, who is a professor of public policy at the University of California, Berkeley, said…

Oh, our sides. This alone almost makes putting up with Obama-Care worthwhile. (But not quite.)

State and local governments across the country tend to offer more expensive health plans than private businesses do, and workers often accept smaller wage increases to retain their benefits…

This is a long exploded myth. State and local government workers on average now make more than those in the private sector.

Because of this, state and local government employees are expected to be disproportionately represented among those whose plans will be subject to the tax…

In a letter in April to the head of a labor coalition, Caswell F. Holloway IV, deputy mayor for operations, said the Cadillac tax would cost New York City $22 million in 2018, increasing to $549 million in 2022…

So the administration of Mayor Michael R. Bloomberg, in its final months in office, is asking municipal unions to agree to seek new bids for the city’s health insurance business, hoping to lower premiums…

Good luck with that!

Jonathan Gruber, an economist at the Massachusetts Institute of Technology who was a paid consultant to the Obama administration on health care policy, said forcing state and local governments to rein in health care costs was exactly what the tax was intended to do.

“This is intended to shift compensation away from excessively generous health insurance toward wages,” he said…

Not quite. This was intended to give the federal government more money, via increased taxes. While also forcing even sacred public sector union members away from private insurance and into the Obama-Care exchanges. But Mr. Gruber is right when he says that it’s working.

This article was posted by Steve Gilbert on Tuesday, August 6th, 2013. Comments are currently closed.

One Response to “Public Sector Union Workers Fight ‘Cadillac Tax’”

  1. What can’t go on, won’t.




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