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City benefits: Another Obamacare victim

October 02. 2013 6:34PM

If you want to know why labor unions are turning on Obamacare, look no further than Manchester. The President’s health care “reform” law has presented city officials with this choice: Slash health care benefits or pay an estimated $3 million a year in penalties.

Workplace Benefit Solution is the company that manages the city’s employee benefit plans. On Tuesday, Tom DeLacey, a principal consultant with the company, told aldermen that the city is about to get hit hard by Obamacare. The law already has imposed costs of $196,800 in this fiscal year. The big hit is coming.

The city offers extremely generous employee health benefits. Obamacare discourages that practice by taxing it — heavily. Obamacare imposes a 40 percent excise tax on health benefits worth more than $10,200 for individuals and $27,500 for families. This “Cadillac tax” is designed not to raise revenue, but to wipe out such plans. It might have that effect in Manchester, where teachers, police officers, highway workers, etc., enjoy precisely the sort of lavish benefits targeted by Obamacare.

DeLacey told aldermen on Tuesday that the Cadillac tax will cost Manchester about $3 million (for both the city and the school district) when it takes effect in 2018.

“These are costs that will have to be shared by the employee and employers. I would think everyone would want to mitigate the impact of that cost, and you’ll want to do that sooner than later.”

There is only one way to “mitigate the impact of that cost,” and that is to slash health insurance benefits.

The Cadillac tax will reduce union bargaining power as well as union health benefits. Benefit levels will have to be dropped below the tax trigger, where they will stay. It is one more union bargaining chip lost — and one more unintended consequence of this ill-conceived law.


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