Wyoming’s Collision Course with the Cadillac Tax

by Charles Katebi

Wyomingites pays more for health insurance than residents of any other state. And thanks to Obamacare, we're about to pay a lot more. Starting in 2018, employer-based health plans that exceed $10,200 in premiums for individuals and $27,500 for families will be hit with a whopping 40 percent "Cadillac Tax." If you receive health insurance through your work, get ready to pay a lot more for it. And even if you don't, be prepared for higher taxes.

The issue was raised at the Joint Labor, Health, and Social Services Committee meeting held in Lovell, WY in late August. Wyoming's Insurance Commissioner Tom Glause, said virtually every employer that offers health insurance in the state will be hit by this tax. Upon hearing this, Representative Lloyd Larsen responded:

"I want to make sure that I'm understanding right. The ACA, as it was passed, is intended to help provide insurance for all citizens of the United States. So, now, if you've got an employer that is providing an exceptional insurance plan, they will be taxed for providing insurance to citizens of the United States. Is that correct?"

Sadly Representative Larson is correct. After raising insurance premiums through thousands of pages in regulations, Obamacare will now punish workers, businesses, and taxpayers for paying high premiums.

The healthcare law mandates that health plans cover a range of expensive services. As these rules took effect, Wyoming's insurance premiums increased a whopping 195 percent in 2014, according HealthPocket.com. Next year, premiums are expected to rise by another 38 percent. As Obamacare continues to raise the cost of insurance, it will force more families and individuals to pay the Cadillac Tax.

Obamacare's architects sold this tax by claiming it will encourage employers to offer less expensive health plans to their workers. However, Obamacare's countless insurance mandates make it impossible for employers to offer low-cost insurance. Instead, businesses will reduce premiums by shifting their plans' costs onto their employees by raising deductibles and copays.

Eventually, businesses won't be able to keep shifting costs onto employees—Obamacare forbids employers from foisting more than 40% of a plan's costs onto their workers. So businesses have a choice to make; they can either pay the penalty or reduce their employees' healthcare coverage. For an employee, this means fewer doctor and benefit choices.

But what if you bought your insurance on the individual market? Although your health plan won't be hit by the Cadillac Tax, you'll still pay it through higher state and local taxes. Public sector workers enjoy some of the most generous health plans in the country and they'll be hit hard by this tax. Those costs will be passed onto you.

According to Ralph Hayes, manager of the Wyoming State Group Insurance Program, the Cadillac Tax will hike state health plans by $4.3 million in the first year alone. But it gets worse. Wyoming's cities and counties employ another 47,000 workers who have health benefits that are just as generous as state workers. According to WyLiberty's calculations, the Cadillac Tax will likely penalize Wyoming taxpayers an additional $20.7 million for these plans. As the premiums on these health plans continue to rise, our tax burden will rise as well.

Obamacare was sold to the public by promising to make healthcare more affordable. But after hearing these numbers, it was clear to everyone at the meeting that the Cadillac Tax was designed solely to gouge patients and taxpayers. As Mr. Hayes put it, "This Cadillac tax really was aimed at a revenue-generating device to pay for the [Obamacare] individual market subsidies, and it is going to accomplish that."