One of the many inane things about Obamacare is the Cadillac tax, which punishes employers who provide their employees with “too much” health insurance. The Democrats who supported this are now having to deal with the fact that the employers most guilty of providing Cadillac health insurance are public agencies. Of these, transit agencies have some of the most expensive plans of all.
The Cadillac tax, which takes effect in 2018, is 40 percent of health insurance costs above $10,200 for individuals and $27,500 for families. As of 2013, Portland’s TriMet reported it was providing health coverage averaging $21,000 a year for individual plans. The agency asked employees to accept a cut to $19,000, but even if the union accepted, this remained well above the federal limit. The recent BART strike was over the same issue.
Even if TriMet negotiated a lower rate, it is likely to rise by 2018 due to inflation. Assuming most employees are on the family plan, paying the Cadillac tax for TriMet’s 2,400 employees could cost as much as $20 million per year, which is about 5 percent of the agency’s operating budget. TriMet was already threatening to cut service by 70 percent if unions did not agree to lower benefits. The Cadillac tax could make this even worse.
