Two-Year Delay Only a Temporary Solution
LOS ANGELES -- Hollywood’s writers welcomed the news out of Congress today that, with the passage of the year-end tax and budget package, implementation of the Excise Tax provision of the Affordable Care Act will now be delayed for two years. But the Writers Guild of America West cautioned that it is only a short-term answer to a problem that requires a permanent fix. Originally scheduled to go into effect in 2018, and often referred to as the “Cadillac tax,” it penalizes comprehensive health plans deemed “high cost” by levying a 40% tax on health coverage over certain thresholds.
“Clearly, there is broad opposition to the Excise Tax. While today’s news is welcome, it only reinforces the necessity of further action from Congress – not just to delay, but to repeal,” said WGAW President Howard A. Rodman. “To preserve the employer-provided health insurance on which so many middle class Americans depend, what makes best sense is to get rid of the Excise Tax for once and for all.”
In a recent letter supporting H.R. 2050, the Middle Class Health Benefits Tax Repeal Act of 2015, sponsored by Representative Joe Courtney (D-CT), the Guild stated: “The Tax will undermine the intent of the ACA by making health care less affordable for our members and the millions of Americans with employer-provided health insurance by forcing benefit cuts and increasing out-of-pocket costs. It will further shift the burden of rising health costs onto workers while failing to address the root causes.” (Read the full letter here)
The Guild opposes the Excise Tax because it is based on a faulty premise: it presumes that individuals overuse health care, and that when they are made to be price-sensitive, they will “comparison shop” and cut back on unnecessary care. This decreased demand, proponents argue, will slow price increases or lead to lower prices. This is incorrect because individual overuse is not what drives U.S. health care costs. In fact, the power of individuals to hold down prices is negligible for two main reasons:
- While the U.S. spends more on health care per capita than any other industrialized country, OECD data reveal it has a below-average supply and utilization of physicians and hospital beds, and utilization in some key categories is declining. This means we have fewer healthcare providers given our population, and we use them less than other industrialized nations.
- The Tax ignores the supply side of health care, where a lack of competition or price regulation leads to high prices. According to independent research, the U.S. has the highest prices for common drugs, office visits and medical procedures, reflecting the fact that drug makers, device manufacturers and hospitals can charge monopoly prices bearing little relationship to their costs.
“Middle class workers and their families will be hit hardest by this tax even though they aren’t the real cause of rising health care costs,” said WGAW Political Director Corri Freedman. “The Excise Tax is bad public policy and we now have an additional two years to eliminate it from the ACA.”
The Writers Guild of America West (WGAW) is a labor union representing writers of motion pictures, television, radio, and Internet programming, including news and documentaries. Founded in 1933, the Guild negotiates and administers contracts that protect the creative and economic rights of its members. It is involved in a wide range of programs that advance the interests of writers, and is active in public policy and legislative matters on the local, national, and international levels. For more information on the WGAW, please visit: www.wga.org.