The Wrong Type of Collaboration: Unions, Employers, Insurers, Et Al., and the Alliance to Fight the Forty
Last week I wrote a LinkedIn post urging employers to collaborate with insurers and other businesses and use their collective clout to hold the line on over the top hospital and other medical care costs. Little did I know at the time that employers were actually collaborating with insurers and others on a health insurance plan issue. Unfortunately, the issue that they see as most worth collaborating on involves maintaining the status quo. Specifically, employers are working with unions, big pharma, large health insurance companies, benefit association groups and others to repeal the Affordable Care Act’s (aka Obamacare) “Cadillac tax.”
Earlier this month 17 organizations including Cigna Corporation, Pfizer Inc., Laborers International Union of N.A., BCBS Association, American Benefits Council, and Independent Insurance Agents and Brokers of America registered as the lobbying group, Alliance to Fight the Forty. The “forty” these groups are fighting is the 40% excise tax, included in the Affordable Care Act, on benefit plans worth more than $10,200 for individuals and $27,500 for families. The tax is effective starting January 1, 2018, and indexed to inflation thereafter.
The tax affects an extremely small percentage of health plans and individuals (in the future, not in 2018). Benefits up to the threshold amount are not subject to the tax, so participants in these plans only pay the tax for amounts above the $10,200 and $27,500 limits. In addition to generating revenue to increase access to health insurance to individuals without coverage, a goal of the tax is to discourage offering extremely generous health benefits with low employee premiums and cost sharing.
Wrong Side Of History
It is easy to understand why unions, brokers, insurers and large employers want to repeal the Cadillac tax. The tax is a potential major disruption to the generous benefits their constituents currently receive. Unions in particular have a long history of thwarting meaningful national health care reform because of their focus on their members to the exclusion of everyone else. The Cadillac tax, as well as other provisions of Obamacare is a threat to the traditional union-member relationship. But that doesn’t mean that things should stay the same because one small segment of the population may lose some very generous benefits. Their members will still have better health insurance coverage with lower out-of-pocket cost than just about everyone else. This fact makes it difficult to support the Alliance to Fight the Forty’s efforts to repeal the Cadillac tax.
Also, with high deductible health plans, where individuals and families have to pay thousands of dollars before their health plan pays anything for most services, becoming the norm, the average citizen may not identify with a group whose members pay no or extremely low out-of-pocket costs. And, the groups that make up the Alliance are not exactly beloved or trusted by the public to make or change health care policy for the greater good.
That said the Alliance does make one good point about the problems with the 40% tax. Health care costs in some large metropolitan areas are much greater than other areas and the 40% Cadillac tax will impact these areas sooner. However, this is an issue that the group can work with the IRS to resolve. There is no good reason to repeal the tax for such generous plans that benefit such a small minority of people.
The point I was trying to make in last week’s LinkedIn post still stands: when it comes to health care reform, employers, insurers and other organizations need to use their clout for more than their own self-interest.