For years, the philosophy on compensation for public-sector workers has been fairly straightforward: The pay isn’t always great, but the benefits are. But that’s changing, and the political implications could be big for public officials.
Under the terms of the Obama health reform law, so-called “Cadillac” health insurance plans worth more than $10,200 for individuals or $27,500 for families face a 40 percent excise tax starting in 2018. The logic behind the plan is that rapidly exploding health costs are driven partly by overconsumption of health-care services by Americans who have little skin in the game thanks to low co-pays and deductibles. The goal is to tax the most generous Cadillac plans to drive people toward plans that make them contribute more. Taxes collected from those who stay in Cadillac plans could be used to fund other aspects of the law.