If you haven’t heard about the Affordable Care Act’s “Cadillac tax,” you will. This tax, which is scheduled to go into effect in 2018, is a 40 percent annual excise tax on employer health care premiums above a certain threshold — $10,200 for an individual and $27,500 for a family, according to reports, including a news report in the Alaska Dispatch News.
As it’s currently proposed, we say “No way.” The one-size-fits-all argument never seems to fit Alaska — and this is no exception.
You see, this tax stands to hit Alaska the hardest. Estimates show about 28 percent of employers nationwide will be affected. In Alaska, with plans in their current form, that percentage is closer to 80 to 90 percent, as noted in the ADN piece.
We’re siding with the critics on this one, including Republican U.S. Sens. Lisa Murkowski and Dan Sullivan, who say this tax will disproportionately affect Alaskans simply due to our higher health care costs.
Sullivan said in a September statement, “This tax will hit Alaskans harder than people in any other state and will only place additional hardships on Alaskans by making healthcare more expensive and inaccessible.”
Democratic presidential candidates Hillary Clinton and Bernie Sanders have also come out against the tax.
Right now, the tax aims to do two things: rein in the costs of health insurance, hence reducing the amount spent on health care nationwide; and fund the Affordable Care Act.
We are skeptical a tax of this nature will truly reduce health care costs. Instead, we see the additional cost simply shifting to the workforce. And when it comes to paying for the ACA, the estimated revenue ($91 billion by 2025, according to the Joint Committee on Taxation) is like spitting in the sea.
It’s not likely this legislation will roll out in 2018 in its current form given the bipartisan opposition in Congress. However, The ADN reported economists and policy analysts from universities and research institutes stand in support of the tax, writing in an Oct. 18 article that it “creates cost-effective plans, encourages employers to limit costs, and will help reduce the federal budget deficit.”
Back in Alaska, we feel it’s just a poor fit and will have a poor effect on the people who live here; this is one tax Alaska should be exempt from. In the Last Frontier, the “one size fits all” plan is rarely a good fit.
Editor’s note: This piece has been updated to include additional attributions.