Free Markets, Free People

Daily Archives: April 5, 2010

Massachusetts may preview the “Cadillac” tax fight to come

Massachusetts is discovering that while you may like your doctor and your insurance plan, you may be paying a heck of a lot more for them in the future, if you get to keep them at all. Guess who are the recipients of “Cadillac” plans in the Bay State? If you said “municipal workers” you’d be right. And an assessment of the various plans doesn’t bode well for them if the “Cadillac” tax kicks in:

A family health plan that costs more than $27,500 would be subject to a 40 percent tax on every dollar spent above that threshold. The tax, set to take effect in 2018, would be levied on insurers, who would probably pass it on to municipalities and other employers. A few cities and towns already have family plans that exceed $27,500, and many others are on track to surpass that level before the tax kicks in.

That means taxpayers in many communities could be facing thousands of dollars in additional costs for every employee, retired worker, and elected leader they cover, unless those communities move soon to scale back coverage, a change the law is designed to encourage.

You caught that last line, didn’t you? “A change the law is designed to encourage”. What about “if you like your doctor and you like your insurance plan …”? The answer, of course, is “too bad”. Taxpayers will be on the hook to pay the tax or workers will have to take fewer benefits. Check these costs out:

Framingham has dozens of employees enrolled in two of its family plans at annual premiums of $40,475 or $39,150, far in excess of the threshold. For individual plans, the excise tax threshold is $10,200, and Framingham has scores of employees enrolled in plans with annual premiums of $16,275 or $14,500.

Many other cities are already close to the family plan threshold and on pace to exceed it by 2018 because of increases in health care costs, including Everett ($27,048 in annual premiums), Brockton ($25,776), Malden ($24,360), Newton ($23,844), Revere ($23,604), and Peabody ($23,466).

If the new tax were in effect today, Framingham would probably face an additional expense of $4,660 to $5,190 for every employee in the family plans, and $1,720 to $2,430 for each employee on an individual plan.

Waltham would also be liable for the excise tax because it offers a family plan with an annual premium of $30,415, almost $3,000 over the threshold.

And Lawrence, one of the poorest cities in the state, also exceeds the tax threshold by providing a family plan that costs $30,180, though the city may join the state’s Group Insurance Commission as part of its financial restructuring.

Here’s the obvious attempt to fool the public into believing someone else (or something else) will be paying the tax:

The tax would apply to health insurers, such as Blue Cross and Blue Shield of Massachusetts and Harvard Pilgrim Health Care. But the insurers would probably pass the additional cost to employers, including municipalities, Seifert said.

On average these municipalities pay 85% of the premium costs. And many of the health care benefits were the result of union negotiations.

So municipalities would have to do what? They have two choices – pass the cost along in a tax increase or cut the cost and benefits to municipal workers. But doing the latter wouldn’t be as easy as you might think.

The country’s major unions, including those representing public employees, fought hard to block or weaken the so-called Cadillac tax, saying it would penalize workers who gave up higher wages for richer benefits.

“It was the main issue our national union was concerned about,” said Brad Tenney, secretary treasurer of the Professional Fire Fighters of Massachusetts. “The concern was that some of our plans that are high value would be hit by this.”

Tenney said union pressure on Congress produced an exception for law enforcement personnel, including firefighters, because of their dangerous duties. For them, the threshold for family plans to trigger the tax would be $30,950, and the individual threshold $11,850.

Ginger Esty, chairwoman of the Framingham Board of Selectmen, said firefighters and others must be willing to accept less generous health coverage for the town to avoid significant layoffs.

“The cost of health care already is extremely expensive,” she said. “And if we don’t get any relief from the unions, there’s only one thing we can do, and that is lay off workers.”

But Pete DeVito, president of the 140-member Framingham Firefighters union, said although he is open to talking with town officials, he would continue to be protective of benefits.

“Everything we got, we got at the bargaining table,” DeVito said. “We don’t like this Cadillac tax because it would hit us. But we have confidence our national representatives will fight it off” by 2018.

On the local level, firefighters and other unionized workers in Framingham have already increased the share of the premium they pay from 10 percent to 13 percent, DeVito said.

Under state law, cities and towns cannot change the mechanics of the health care plans they offer — the amount employees pay in premiums and in copayments, for example — without union approval.

So there you have a preview of the upcoming fight – certainly 8 years away, but none-the-less one that will simmer the entire time – and the probable results. Tell me how, even with 8 years yet to pass, this redounds well on Democrats.

Many say this particular tax will never be enforced. Possibly not – I mean, can you see Democrats pushing to have this finally enacted given those affected by it? But if that’s the case, then another major revenue stream disappears that was destined to help pay for HCR. Another in a long line of lies, half-truths and nonsense sold to get the bill through Congress with at least the veneer of justification. It makes the CBO numbers even more nonsense than they already are.

It’s also an issue which should be brought to the forefront of every single discussion about the impact of this bill and waved in the face of those who fight repeal. It is now nor has it ever been the business of the government as to what benefits I have negotiated (or have negotiated on my behalf) when it comes to health care insurance. And I think those that remind the people of that premise will find a willingly receptive audience.



Incompetence is color-blind

I am so sick of this.

Embattled Republican National Committee Chairman Michael Steele said he won’t resign despite calls for him to step down amid reports of the group’s excessive spending, adding that he and other African-American leaders such as President Obama have a slimmer margin of error because of their race.

You know, I thought (hoped?) Michael Steele was a promising pick for the GOP’s National Committee Chair. But since he’s been in charge, in a position in which his primary job is to quietly raise money for the party, he’s been anything but quiet or effective. He’s been outspoken and gaffe prone. And indications are (bondage club expenses? Clothing purchases by staffers written off as “meals” and ‘tips”?) his administration hasn’t been the greatest either.

In anyone else it’s a sign of incompetence. Michael Steele chooses to make it a matter of race.

“My view on politics is much more grassroots oriented, it’s not old boy network oriented, so I tend to, you know, come at it a little bit stronger, a little bit more street-wise, if you will. That’s rubbed some feathers the wrong way,” Steele told “GMA’s” George Stephanopoulos.

Yeah, see, that’s not the point, Mr. Steele – you’re a party fund raiser. Your job isn’t to sound off and rub feathers the wrong way. Who is the chair of the DNC and why don’t we hear him sounding off as you do?

And, btw, perhaps it isn’t just the fact that Steele is, at times, intemperate in his speech (he blurts before he thinks and then spends days backing off his blurts) but is ruining the reputation of the organization just at the time it needs strong leadership focused on fund raising for the upcoming midterm elections. Instead the GOP gets this:

Steele is under fire by his own party members for what some people consider lavish spending — $17,000 for private jet travel, $13,000 for limousines and car services and $9,000 for a trip to the Beverly Hills hotel. But the most controversial revelation was that RNC staffers spent nearly $2,000 at Voyeur West Hollywood, a sex-themed nightclub in Los Angeles. The employee who authorized the expense was fired, but then the RNC shot itself in the foot again later, sending a fundraising letter that mistakenly directed donors to call a phone-sex number.

Steele said the spending issue is being blown up “larger than it needs to be.”

“The reality of it is, when I first heard about this behavior going on, I was very angry, and we dealt with it. We got to the bottom of it,” Steele said. “We have been putting great controls in place for the last few months, as a matter of fact, on some of our financing.”

Leaders set the tone. If a leader is austere and requires the organization to be austere in its spending, then that’s normally what is done. If the example is otherwise, staffers usually reflect that as well. The fact that he claims he’s been surprised by this says he’s not monitored what is going on in his own organization.  Organizations do what leaders monitor. Most who’ve ever been in charge of any type of organization would deem the present situation to be an indication of incompetence.

And, as I said in the title, incompetence is color-blind. Steele was entrusted with a job and he’s failed to live up to the expectations of that job. That has nothing to do with skin color or “margins of error”.



More fuel for the Tea Party discussion

As we do the back and forth on the origins of the Tea Party (TP) a poll has been published that gives us a peek at the demographics:

Diverse group:

The national breakdown of the Tea Party composition is 57 percent Republican, 28 percent Independent and 13 percent Democratic, according to three national polls by the Winston Group, a Republican-leaning firm that conducted the surveys on behalf of an education advocacy group. Two-thirds of the group call themselves conservative, 26 are moderate and 8 percent say they are liberal.

Tip of the iceberg:

The Winston Group conducted three national telephone surveys of 1,000 registered voters between December and February. Of those polled, 17 percent – more than 500 people — said they were “part of the Tea Party movement.”

Unified by fiscal matters:

The group is united around two issues – the economy/jobs and reducing the deficit. They believe that cutting spending is the key to job creation and favor tax cuts as the best way to stimulate the economy. That said 61 percent of Tea Party members believe infrastructure spending creates jobs. Moreover, given the choice Tea Party members favor 63-32 reducing unemployment to 5 percent over balancing the budget.

43% do not identify themselves as Republicans. That’s a large chunk – bigger actually than I thought it would be. And 13% self-identified Democrats. That diversity of politics tends to moderate the platform and explains why in some areas you hear Medicare cuts used as ammunition against the HCR monstrosity. What I would have loved to have seen is age demographics on this, because I’m also of the opinion that for the most part this is an older movement in terms of age of those identified with it. The poll says the make up is “male, slightly older and middle income”. I’m not sure what “slightly older” means. Someone will find a way to put “white” in front of male and revive the “angry white male” meme, I’m sure.

17% is a significant chunk of the population if that’s a good indicator of the size of the TP movement. Those we see out in the streets and attending TP rallies are indeed the tip of the iceberg if that’s true.

The unifying themes are economy and the deficits. Jobs and spending. But, as you can see the diversity of opinion is evident in the two issues cited in the poll. Neither reflect a “hard core” fiscal conservative theme. And both actually place jobs before spending.

So those points tend to reinforce my ideas about the Tea Party movement.

OTOH, reinforcing one of Jason’s primary contentions:

The group also vehemently dislikes President Barack Obama – even more so than those who called themselves Republicans in the survey. Over 80 percent of Tea Party members disapprove of the job he’s doing as president, whereas 77 percent of Republican respondents said they disapprove of Obama. The Tea Party members are also strongly opposed to the Democrats’ healthcare plan, with 82 percent saying they oppose it — only 48 percent of respondents overall were opposed.

Although dislike is high, it doesn’t yet point to Obama being the reason for their formation. What it does point out is much more than just the Republican portion (57%), if everyone of them voiced their dislike, weren’t the only one’s who dislike Obama. A good portion of the independents must feel that way as well – something I’ve been droning on about for some time.

And to my point about Congressional Republicans:

The group has a favorable view of Republicans generally but that drops from 71 to 57 percent if they’re asked about Congressional Republicans. Congressional Democrats are viewed very unfavorably by 75 percent of Tea Party members – a uniquely strong antipathy. An overwhelming 95 percent said “Democrats are taxing, spending, and borrowing too much.”

There is a good bit of anti-incumbent fever among this group. And I think part of it is they’ve seen the Congressional Republicans talk the talk so many times and then cave when given the opportunity to walk the walk.

Interestingly Gallup has done a similar poll to the Winston poll.  And they find a slightly larger percentage supporting TP but find the demographics to be very similar to the Winston poll:

Tea Party supporters skew right politically; but demographically, they are generally representative of the public at large. That’s the finding of a USA Today/Gallup poll conducted March 26-28, in which 28% of U.S. adults call themselves supporters of the Tea Party movement.

Their polling found a much larger independent percentage (43%) and slightly smaller Republican (49%) and Democratic (8%) slice. Men to women is 55% to 45%. Gallup did publish age demographics 50% are age 50 or older, however, when you look at the comparison to all of the US the TPs are very representative of national demographics.

What these polls tell us is while there is a rightward skew to the TP (which some would explain by saying the country is a “center-right” country) the demographics of these polls show a remarkably diverse group that are quite representative of the demographics of middle America. And, they’re finally fed up.

While we’ll probably argue till the cows come home as to the TP’s origins, but it hard to argue that the group isn’t diverse, has a unifying theme, and isn’t aimed at changing the way the federal government does business – and if that means firing every Congressional Rep up there, they seem more than willing to do that. The party most threatened is the Democratic party, however, Republicans that don’t meet TP criteria are subject to attack as well. And that’s entirely justifiable in my book.