Wednesday, December 17, 2014

Christie Cites 'Cadillac Tax' In Push To Cut Public Employee Benefits

In the latest body-blow to the state's long-term fiscal health, Gov. Chris Christie is warning that New Jersey taxpayers will have to pay a $261 million "Cadillac tax" under Obamacare on public employee health benefits starting in 2018. And that federal health benefits tax will grow to $837 million four years later.

Christie Cites ‘Cadillac Tax’ In Push To Cut Public Employee Benefits

New Jersey Gov. Chris Christie warns that the coming ´Cadillac tax´ on health insurance will deepen the state´s fiscal crisis. Some experts say the governor´s warning is premature and that New Jersey should push insurers to hold down costs.
New Jersey Gov. Chris Christie warns that the coming 'Cadillac tax' on health insurance will deepen the state's fiscal crisis. Some experts say the governor's warning is premature and that New Jersey should push insurers to hold down costs. Mark Wilson/Getty Images, file

In the latest body-blow to the state’s long-term fiscal health, Gov. Chris Christie is warning that New Jersey taxpayers will have to pay a $261 million “Cadillac tax” under Obamacare on public employee health benefits starting in 2018. And that federal health benefits tax will grow to $837 million four years later.

Tucked into President Obama’s Affordable Care Act as a cost-containment measure, the 2010 federal law gave public and private employers eight years of advance warning that the federal government would levy a 40 percent tax on the “excess amount” by which individual health insurance policies exceeded $10,200 and family plans cost more than $27,500 beginning in 2018.

Union and academic experts say Christie’s warnings are speculative and premature, given past delays and changes in the implementation of the Affordable Care Act, and they contend that Christie should follow the lead of states like California and Massachusetts that are pushing their insurance providers to hold down premium costs, instead of seeking to cut benefits.

But if the Obamacare tax goes into effect as scheduled, it would add to New Jersey’s long-term fiscal crisis, which has been caused by sluggish economic growth, mounting debt, and huge unfunded liabilities for pensions and retiree healthcare. Furthermore, the “Cadillac tax” would hit school districts, municipalities, and counties harder than state government, adding to the state’s highest-in-the-nation property tax burden.

“Potentially, it’s a big problem, but very few people are aware of it,” said Lou Neely, chief financial officer in East Brunswick. “If you ask most mayors and human resource people today what they think about the Cadillac tax, they probably think you’re talking about a car.”

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