Obamacare's Cadillac Tax Hits the College Campus

Obamacare's Cadillac Tax Hits the College Campus


Higher education and its comfortable inhabitants on campus have long been hotbeds of support for Obama and Obamacare. Now, along with business and labor, i.e., the other inhabitants of what passes for the real world, they are about to become victims of one of its high “Cadillac” tax on generous health plans.

In 2009 President Obama gave assurances that he did not want any tax on health insurance plans he considered wasteful or too generous to affect average Americans. In one of his now famous talks broadcast on CNN, MIT economist Jonathan Gruber, "one of the men who helped draft the legislation, [explains] that is not only precisely what will happen - but that was the intention of the tax." 

Related: How Obamacare Will Impact Your Taxes

Politico notes that “a mix of business groups and labor unions” are arm in arm — and up in arms — fighting to kill this tax. Unnoted in the article is that higher education also will be hit especially hard. The dramatic impact of the “Cadillac” tax on higher education has been noticed before, such as on this site (“Obamacare Hits Adjuncts Hard”) and Megan McArdle’s delicious putdown, “Whining Harvard Professors Discover Obamacare.”

Now, as the scheduled 2018 implementation of the tax gets closer and more and more colleges begin to adjust their health plans to deal with it, awareness of the impending pain is beginning to spread. In New Jersey, four of the state’s 11 public colleges and universities have dropped student health insurance, and three of Washington State’s 6 public institutions have done so as well. Here are a few more tax induced changes:

George Washington University: “It no longer offers its most generous plan as to avoid paying the tax.”

University of Virginia: “Major changes are coming to the University of Virginia health plan. With U.VA facing rising health care costs, spiking expenses of high-dollar claims and looming fees and taxes connected with federal health reform….”

William Patterson University: Dropping health insurance.

University of Minnesota: “One of the state's largest employers is proposing to scale back its employee health plans to avoid a massive tax penalty under the new federal health care law.”

Ohio University: “Ohio University employees might see their health care deductibles double and premiums rise because of a provision of the Affordable Care Act that taxes so-called 'Cadillac' health plans, officials have said.”

Related: Thousands to Get Booted from Obamacare Plans

In a mailing sent to “Dear Colleagues” last month, Ohio University provided a detailed explanation of the need for its changes:

"The university’s health care costs are projected to increase by as much as 8 percent per year, or $4 to $5 million annually, for the next several years. Additionally, in 2018, the ACA will begin taxing high cost Cadillac health plans where health plan costs exceed $10,200 per year for individuals or $27,500 per year for families. As currently structured, the university’s PPO health plans are on pace to exceed these levels and subject Ohio University to the Cadillac plan tax."

As more and more colleges and universities cut their benefits in order to make their health plans “sustainable,” I suspect the new campus fetish of sustainability will take a serious hit.

This opinion piece originally appeared in Minding the Campus.

John S. Rosenberg, a former history professor at Northern Illinois and Bucknell, now writes about discrimination and other matters at Discriminations.

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