Tax on ‘Cadillac’ insurance plans could snare hotel maids

[dkf]

http://www.lasvegassun.com/news/2009/oct/11/tax-cadillac-plans-could-snare-hotel-maids/

WASHINGTON — Several years ago, when the powerful Culinary Union was negotiating new contracts on the Strip, its workers decided to forgo an initial pay increase to preserve their health care benefits.

The union offers its workers, who clean hotel rooms and work in casino restaurants, a great benefits package by many measures — workers pay no premium from their paychecks for a policy that covers themselves and their families.

Now, under the health care reform plan being debated in the Senate, those benefits could eventually be taxed to help raise money to cover the uninsured.
The proposed tax on insurers providing the so-called Cadillac health care plans would hit employer-provided policies that cost more than $8,000 a year for an individual or $21,000 for a family.

But as a New York Times headline read a few weeks ago, the proposal could also snare a few Chevys.
Higher-end policies are enjoyed not just by corporate executives, but also by middle-class union workers who have long negotiated for better benefits over pay. They’re also provided by many smaller companies, which tend to pay more for health coverage because they have fewer workers among whom to spread the risk.

The Culinary’s health benefits package costs the companies about $8,000 per full-time worker, right at the threshold for the tax and about double the average for an individual employer-offered health plan in Nevada.

[boppers]

1. "double the average for an individual employer-offered health plan"...

Why are they getting charged twice as much?

[iamjoy]

20. More Health Problems, Maybe?

Part of it could be that the plan has low/no deductibles, copays, coinsurance, etc. This is a good thing for a hotel made or culinary worker who doesn't earn a lot of money and may not have the funds left over after paying household bills for a medical problem.

Another could be that this group has more health problems than the population at large. Housekeeping and culinary work is often hard, hot and dangerous. Some health problems related to it may build up over time making it hard to pin down as work related, but wearing one down anyway. And pardon my stereotyping here, but most housekeeping staff come from the lower socio-economic levels. They may live in areas with greater pollution so they are more subject to environmental dangers in their home as well as on the job. Also - again pardon the stereotyping - lower income is also associated with poor health in this country in part because people in these groups are less likely to make good nutritional choices.

I don't mean to sound condescending or superior here. If I had to clean just a dozen hotel rooms I would break down and weep like you'd asked me to clean the Aegean stables. It's part of the reason I get frustrated when people think poverty is linked to laziness - and we hear this from people who would probably run screaming from the kind of tasks some lower wage/"unskilled" workers do every day.

[boppers]

25. Interesting points, another comes to mind:

Larger than normal pregnancy and family rates might factor in, as well.

Okay, I'm sold. The caps just aren't "smart" enough.

[dkf]

28. See shimmergals comments on post #18

Apparently it's a coop so there isn't a greedy insurance company causing excessive premiums. Instead they did trade off wages for security from the fear of medical costs which is truly what insurance is supposed to be for.

The Federal Government will be taking away a real benefit from this union. Now they too will need to worry about co pays deductibles and out of pocket expenses.

Or they can pay a 40% surcharge. Ironic to see maids having to pay 40% taxes.

[ProSense]

2. "Several years ago, when the powerful Culinary Union was negotiating "

Time to renegotiate. Also, $8,000 and $21,000 are not at the threshold. The article is several months old and appears to be based on the Senate Finance bill.

Still, the culinary union needs to renegotiate these after reform, save their members money.

[dkf]

3. It's not how much it costs now but in 2013.

My costs are going up 10-15% next year. How about yours?

And I'm not sure when it will be a good time to renegotiate wages in Las Vegas. I expect the hey day of Vegas casino gambling may be over.

[ProSense]

4. Unions need to renegotiate.

They'll have more leverage, and choices, when reform is passed.

Still, don't understand why you think people need to be stuck (or need to stick) with these outrageous plans?

[dkf]

8. I don't believe there will be a tradeoff for wages.

If the bill stipulated that wages must increase by any deviation in projected costs maybe I would. But with all the outsourcing and other efforts to cut costs I don't see it.

In this downturn cost cutting is the source of earnings growth and Wall Street expects steady growth. They will continue on this vein until they hit the bone.

When it comes time to negotiate they will say the earnings and benefits were agreed to when they were making a lot more money and they can afford neither the wages nor the benefits anymore. It's the same argument my state is making.

Expecting lower benefit payments to increase wages sounds like trickle down economics to me. I am highly skeptical.

[TheKentuckian]

30. Have you been to reality recently?

What leverage and choices will they have? That's rich.

I guess you won't be happy until people lose their coverage that they traded away years worth of wages for, the unions won't be able to force any concessions, and the entire union movement is at long last killed so the corporations will have a freer hand to dominate the American people completely.

If Obama said to eat babies, some folks would be on here yelling that liberals are supposed to be pro-choice and what does a few months matter?

[last1standing]

5. You want them to renegotiate wages when rooms are going for next to nothing in Vegas?

What do you expect to happen if they renegotiate now? Do you think that Harrah's and MGM will just say "Here you go! Have more money because it's just the right thing to do"?

People who expect unions to renegotiate their contracts for more money anytime soon are either very ignorant of economic reality or really don't give a fuck about workers.

[girl gone mad]

29. Spoken just like a good little corporate shill.

:puke:

[ThomCat]

31. Do you mean renegotiate to cheaper plans?

What if their people don't want to give up the coverage they have now, and going to a cheaper plan would require giving up coverage?

Would they have to take higher deductibles? Higher co-pays? Restricted lists of what is covered? Restricted formularies of medications?

That's what they will be offered to cut costs.

If they accept any of those reductions in order to avoid taxes then they are giving in and accepting the unjust concept that only rich people deserve comprehensive insurance plans.

If we can't have real health care reform, at the very least them Everyone should have access to comprehensive insurance.

[ChicagoSuz219]

6. My guess is...

...they'll have to add an addendum about income, as well... like Cadillac plans will be taxed over $100,000 annual income - something like that.

[last1standing]

7. Hard to do since they're taxing the insurer in an attempt to reduce health care benefits.

The plan here is to reduce the cost of all plans so that the government has to pay out fewer subsidies to the poor. The problem is that it also has the effect of reducing coverage for everyone with means more out of pocket costs, like higher co-pays.

The end result is that this "universal health care" plan ends up providing less health care and more expense for everyone.

[TransitJohn]

26. 'Universal Health Care' in this bill means

that all Americans universally must pay for-profit insurance companies, or be criminals.

[HughMoran]

9. Exchanges to provide larger pools and tax breaks will help small businesses

The 2nd to last paragraph may be the only answer for the union people:

"Chuck Marr, director of federal tax policy at the Center for Budget and Policy Priorities in Washington, expects the so-called Cadillac tax will remain in some form in the final bill — perhaps by scaling it back to hit only those who are also upper-income earners."

[dkf]

10. That might be hard though because insurance companies would have to know the agi of all these

People who it is covering.

The unions wanted the amounts raised but Obama is counting on the taxes to pay for this bill

[ladywnch]

11. Has anyone put a hard definition of what a 'Cadillac plan' actually consists of?

I ask this because, in my mind, a 'Cadillac' plan has little or no deductible, a low out of pocket max, a high lifetime cap (3 million or better), very few exclusions or restrictions.... THAT is a Cadillac plan. Just because an employer pay for a policy does NOT make is a 'Cadillac'. So are they actuallly looking at the 'plan'/coverage or just how much both employer and employee are paying?

Does anyone know?

[dkf]

12. Benefit features are NOT taken into account. Just premiums plus vision dental and flexplan.

[Lydia Leftcoast]

13. In other words, what people in most other countries take for granted

Grrr.

[boppers]

14. It's about dollars put into insurance companies, and tax-free savings.

Slightly outdated: http://www.slate.com/id/2232434/

Basically, if an insurance company is charging twice the average for coverage, the insurance company is taxed for exploiting the insured. It doesn't make a difference how the insurance company is making that money (employer vs. employee contributions), or if you're paying additional money out of pocket for procedures... if they're charging insane amounts, then they're taxed for it.

Exculsions and restrictions are covered in other parts of the bill, as are lifetime caps.

[SpartanDem]

15. There are design issues

but Paul Krugman said best today the details need to be fixed, on balance though it is a good idea. A higher threshold and more allowance for regional varince are needed, but its current faults don't mean it isn't a good cost controller.

[dkf]

16. They need the revenues.

Otherwise it falls apart.

[SpartanDem]

17. It's not like they can't make it up elsewhere

the Senate also increases the Medicare payroll tax for high income earners or the House income tax I'd be very surprised if the excise tax passed without any changes.

[dkf]

19. I read the unions wanted a 27,000 or 30,000 threshold but

That would wipe out $50 billion in revenue from the expected $149 billion they plan to raise. This IS the main source of funding for the entire bill.

Pelosi was trying to change the revenue source but Obama wants to keep it.

[SpartanDem]

23. But haven't read any that said he isn't willing to amend it

First, it's good policy second it's good politics. If he want to keep unions in his camp he get them something it may not be the full 27 to 30K, but he'll get something to ease the impact.

[dkf]

27. Doesn't look promising to me

With labor groups warning that the tax will infuriate a key part of the Democratic base — union members — President Obama has agreed to meet with several top labor leaders on Monday to address their concerns and try to defuse their anger. The group includes the presidents of the A.F.L.-C.I.O., Teamsters and the steelworkers’ and service employees’ unions.

But whether the tax is negotiable remains unclear. Not only has Mr. Obama specifically endorsed the idea, but the White House and Senate leaders see the tax as pivotal in paying for the health care overhaul and addressing runaway health care costs.

http://www.nytimes.com/2010/01/09/business/09union.html?hpw

[shimmergal]

18. Some more info. on this plan. . .

Yes, the employers pay contributions into the Culinary Fund for each hour the employee works; this was agreed on in lieu of a wage increase the last time (or maybe last two times) the contracts came up for negotiations.

However, for any month when an employee averages less than about 32 hrs. work a week, the employee has to pay the whole amount to keep coverage. A lot of casino workers have been on short work weeks for the past year or two, so it's not like they're home free. Imagine getting taxed on this money you've struggled to put into your insurance! It's like being taxed for the "privilege" of paying those high Cobra payments.

Incidentally, the Culinary plan is one of the few existing co-op plans that works. It's non-profit, administered by the union, and they're always working on getting as good and affordable rates and doctors in the network as they can. The co-op works because they have a large membership concentrated in one geographic area.

My daughter is a casino worker and she's livid at this threat to her family's well-being. Much of the casino workforce has typical chronic ailments: neck, back, and leg problems abound, because of the constant lifting etc. Plus workers on the casino floor are exposed to second-hand smoke throughout their work shifts. Most complaints about "overusing" health benefits probably involve just such work-connected problems.

[Hello_Kitty]

21. Something tells me your daughter won't get that "high risk job" exemption either.

Clearly, the architects of this excise tax plan didn't take a lot of things into consideration.

[dkf]

22. How can they afford the whole premium?

That is nuts!

[last1standing]

24. Thanks for the info.

Can you imagine what would happen to your daughter's pay and benefits if the Culinary had to renegotiate right now because the government passed a law that broke her contract? Too many at DU today are just saying "that's what unions do".

[IndianaGreen]

32. Too many DUers suffer from the Reaganism disease

not only are they hostile to unions, but they would side with Ronald Reagan when he fired PATCO had he had a "D" after his name.

[muriel_volestrangler]

33. $8,000 per worker need not mean the $8,000 per individual, or $21,000 per family, limits are reached

We'd need to see how many workers are getting insurance just for themselves, and how many for families, to know how close they are to the limits (which I believe are now $8,500 and $23,000). For instance, if half the workers got individual insurance at $5,000, and half for their family at $11,000, then "the Culinary’s health benefits package costs the companies about $8,000 per full-time worker" would be true, but each group would still be far away from having to pay the tax.