The economists advised the government to introduce the Cadillac tax into the Affordable Care Act, to stop the municipal unions from going overboard with excessive health care costs. These plans, which are in vogue, might result in high taxation starting from the year 2018 when, the government is all set to tax every expensive plan.
Major places like Boston, New York, Westchester County, Calif and Orange County are ordered to find instant solution for this or the situation might be disastrous, resulting in even loss of jobs. Under the present scenario, the federal workers receive more health insurance benefits that the private sector employees. The health plans also differ when it comes to state and local governments. Evidently, the respective workers will be variably affected by the taxation.
Boston, New York, WestchesterBy the year 2018, the government will levy 40% tax to individual who enjoys plans that cost above certain parameters, namely $10,200 and $27,500 for individual and family. Though there might be cut offs for retirees and personals engaged in high-risk profession. The New York City administration mentioned that it would pay $7,128 and $18,249 respectively for individual and family, this is inclusive of the funds that the City has for prescription drug benefits.
According to Kaiser Family Foundation survey, the average health plan last year was $5,615 and $15,745 for individual and family. If there is no reduction in this area then the expense is expected to reach about $8 billion by the year, 2018 only for pre-Medicare retirees and dependents. By the year 2022, this will swell to $549 million. The Cadillac tax would alone cost the New York City $22 million in the year 2018. Deputy Mayor commented that they city needs to act fast or be hit strongly with taxation.
According to the recent studies by Kaiser Family Foundation, the standard contribution by government workers is 12% and 23% for individual and family plans. The largest of the plans are hold by people who are not required to pay anything as their insurance premiums. These groups include 93% retirees and 95% state employees.
Thus, most cities are going for plans with cheaper health plans to avoid being taxed. Connecticut municipal unions have already agreed to seek proposals for new insurance coverage. The chief financial officer for Boston, Meredith Weenick commented that the tax might result in a very bad collapse for the finance if it is unexpected. In Boston, some 20,000 employees are presently in plans, which, might fall under the taxation threshold in the year, 2018.
In Orange County, municipals opposed the taxing scheme. The teachers’ union of the County however, accepted the move of reduction in the premium rates from 6% to 3%.
In New York, the problem, if unsorted, would be succeeded by the next elected Mayor after Bloomberg. The city has already started calculating its mounting cost of healthcare on the budget.
Mr. Holloway’s suggestion might work here, who, is repeatedly asking the officials to see to the matter urgently and find ways to stop the escalating cost of health care.

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