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OPINION: Alaskans deserve reprieve from harmful taxes

September 7th, 2017 | Tom Anderson Print this article   Email this article  

'Cadillac tax' will increase cost of health insurance for most of state's residents

A new tax is set to take effect in 2020 that will increase the cost of health insurance for most of Alaska's 742,000 residents. The tax — known as the "Cadillac tax" — is a part of the Affordable Care Act that must be repealed regardless of the political machinations reverberating around the halls of Congress. The Cadillac tax is a 40 percent tax on employer-provided health insurance.

Instead, in anticipation of the new tax, businesses and unions will try to avoid the tax by shifting costs on to workers by increasing deductibles, hiking premiums and lowering coverage for health care services that their employees bargained for as a part of their benefits packages.

The tax was intended to impact rich people with fancy health insurance plans. But the way the scheme worked out, it slams almost every American who gets his or her insurance through work with higher costs and worse health coverage.

Starting in 2020 any employer or union who provides workers with a health insurance plan valued at $10,800 for individual coverage and $29,100 for family plans would pay a 40 percent penalty on any amount over those set thresholds.

The plan value guidelines don't consider the stunning increase in the cost of employer-provided health care plans as a result of Obamacare. On-site medical clinics, employee assistance programs and wellness programs offered to employees as part of their benefits package will be subject to the tax. Uncle Sam also didn't bother to factor in inflation or cost of living into the equation.

This particularly harms Alaskans, since our higher cost of living spills over to health care and health insurance prices. As a result, nearly every plan offered in Alaska will blow past the modest federal threshold for "high-cost" health insurance plans.

Alaska's businesses are bracing for impact. Employers such as Walmart, Carrs-Safeway, Fred Meyer and ASRC Energy Services face harsh realities for their workers. Many employees may even lose their health insurance because of the new costs. At the very least, the Cadillac tax will raise the cost of health insurance and could lower the standard of living for 177 million Americans who rely on employer-based health insurance. It's bad news all around.

Obamacare has been a debacle for Alaska. In 2010, the Kaiser Family Foundation reported that 18 percent Alaskans were uninsured. After the passage of the ACA, the Census Bureau estimated in 2016 that 16.2 percent of Alaskans were uninsured. Most working Alaskans now pay more for worse insurance under Obamacare for the lousy benefit of insuring about 7,500 more Alaskans. This terrible trade-off will be nothing compared to the Cadillac tax.

Fortunately, there is bipartisan support for scrapping the tax: Public Opinion Strategies' online poll of 1,200 people showed that 79 percent of Republicans and 56 percent of Democrats oppose the policy. During his campaign, President Trump pledged to repeal the Cadillac tax. With public sentiment and the president both in favor of getting rid of the tax, Congress is all that's standing in the way of getting rid of the scheme.

Federal lawmakers must come together and do what's best for workers, employers, unions and our nation's economy and agree to toss the Cadillac tax into the discard pile once and for all.

Tom Anderson is a freelance writer in Alaska and hosts a morning news show (


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