Only the US government could think that having a good health plan is a reason to slap a tax on somebody. Good health plans keep people out of bankruptcy, healthy, productive, consuming, and paying taxes. Healthy people are the best economic stimulus we can have!
1
There is a market at work for non-governmental health care payment plans. That market is composed of two sets of buyers and sellers, groups with sellers, and individuals with sellers. Groups are the most affordable for patients because the risk pools are huge and diverse, making the costs and premiums far more easy to predict. Individuals are a different matter. If the pool of individuals is large and diverse, they can be like group plans, but if not, the predictability is too inaccurate to offer similar premiums.
Single payer plans with universal coverage are highly predictable and can offer the lowest premiums or tax contributions. That’s where these Democratic candidates who advocate for Medicare for All start. They make no effort to consider how to get there. That is why they are not gaining any ground with it.
The ACA focused upon uninsured and under insured. Medicare is for old people but funded by all. Employer insurance ranges in coverage from limited to comprehensive. Folding it all into one system is a vision but no plans exist that have been considered. But what is likely that the end result will try to match Cadillac plans. To make it affordable there will need to be continual efforts to reduce costs while providing optimal care. This is nothing that has been planned, either.
The trouble is that insurance is based upon actuarial data that enables companies to estimate costs and profits. There seems to be a presumption that insurance costs risks are such that regardless of the pool of persons enrolled, the costs are uniform, thus high premiums mean some kind of excess beyond basic health care needs are being served. Perhaps cappuccino in the lobby? Massages in the waiting rooms?
The cadillac plans provide comprehensive care with lower copays, lower deductibles, and higher maximum coverage. All the targets sought by programs like the ACA which are not met.
Health insurance paid by the employer with pretax dollars should be taxed. Just tax the benefit, adjust the tax rate so that it’s revenue neutral e voila, the debate is over.
Having good quality, affordable health care which does not bankrupt a family when there is a health crisis, is NOT a "Cadillac", premiere policy. It should be considered a basic human right as it is in nearly every other civilized country on this planet.
3
This article makes only a general reference that it “taxes only the most expensive health plans”. Other media outlets have been more explicit, with scary headlines like “House repeals 40% excise tax on high-cost health plans”.
Such headlines are inaccurate. The part of the “Cadillac” plan which is actually subject to the excise tax is only the amount of the premium which exceeds the ceiling thresholds referred to in the article (currently $11,200 for individual coverage and $30,100 for family coverage, to be more precise). These thresholds are also adjusted annually for inflation.
So for instance if an individual plan has an annual premium of $12,000, the tax would apply only to the $800 over the ceiling. This would result in an excise tax of $320 — well less than most people spend for their morning latte at their local coffee drive-thru over a year.
It is true as the author mentions that some of these plans may apply to older and sicker patient populations. It is also likely that these plans apply to high-cost service areas such as Boston and Washington, DC. For the vast majority of the country, $30K buys an extremely — probably overly, with first-dollar coverage encouraging unnecessary use — generous health insurance plan.
1
If you have full health coverage in most developed countries, that is considered a basic government service. If you have full health coverage in the United States, that is considered a "distorting" force that must be destroyed.
Got it.
This, by the way, is why people laugh at the idea that Economics is a science.
5
If we had Single Payer we would all have Cadillac plans.
2
If my wages rose at the same rate as my health insurance cost over the last twenty years;then gee whiz,taxing health care plans might make sense. Today my Canadian cousins think we are slow to get it when it comes to health care. Others think we are only stupid when it comes to health care. They do not view it as a privilege,but as a right.
2
We have a small office and pay 100% of the cost of health insurance for an individual and their family. The cost of Healthcare Insurance has increased yearly BUT for less coverage and a bigger deductible. We also pay the deductible. That said, healthcare in America is a disgrace, where we pay MORE for worse outcomes.
Sadly, most Americans are on the losing end of healthcare and don't even know it. Obamacare was an excellent start within the parameters of healthcare we had but we would have none of it. We were told an untruth that it was not good and we parrotted the narrative. The untruth was recited daily by big Corporations, their Lobby, and our Representatives. Why because they do not want to spend their monies on employee healthcare. The American public's stupidity is the cause of our problems.
6
“If you use your health plan a lot and have few complaints about it, you might have a Cadillac plan.”
Indeed. All the “experts” agree - if your insurance doesn’t upset you then it’s too generous. This really encapsulates the technocratic approach to health insurance reform that defines the ACA, and why it has been a political disaster despite many excellent and popular features.
9
Yet another falsehood from the Obama administration on healthcare. First it was if you like your doctor, you can keep your doctor.
Then it was the ACA would be budget neutral, which it never was. They simply added this Cadillac Plan tax so the CBO could 'estimate' the ACA being budget neutral, even though Democrats never had any intention of enacting the tax.
2
Interestingly, this article made me hate my car but remain happy with my current insurance.
@Jeffrey Gillespie Everyone likes their insurance until they have to use it for something serious. I hope that day is a long way off for you but that's no reason to not understand the problem.
1
Here in Canada we could buy a Cadillacs with the money we save on our health care.
5
It was pretty obvious from the beginning this tax would never happen. It was simply a bookkeeping entry to get the CBO estimates so Congress could pass the ACÁ. This latest action simply put a fork into it. Yet pundits still ask why people are so cynical about politics.
2
The Canadians, the French, the Brits, the Germans, the Scandinavians and the Japanese seem to do fine by ensuring that all their people have adequate healthcare rather than wasting time debating whether to tax astronomically priced plans put forth by greedy private insurers. We should try it sometime.
6
Health insurance and car insurance cannot be compared.
Car insurance is not subsidized by the government.
Health insurance is subsidized by the government
- big time -
Medicaid
Medicare
Obamacare
And - yes -- employer-provided health insurance --
the biggest government subsidy of all --
ever since World War II --
the 100% exclusion from the employee's taxable income
of the value of the share of costs paid by the employer --
in complete contrast to ordinary wages,
where the wages paid by the employer
are included in the employee's taxable income.
Most Americans have no idea the size of this benefit
-- worth several hundred billion dollars annually.
About 15 or 20 years ago, Repubs were toying with the idea
of limiting -- or even abolishing -- this generous tax exclusion enjoyed so unthinkingly by so many Americans.
But after a few trial balloons, the Repubs folded --
it would have been political suicide --
even though it made perfect sense economically.
Ever since World War -- over 70 years --
Americans have been hooked -- like drug addicts --
on the tax exclusion.
Obamacare tried to re-introduce the idea of at least limiting the tax exclusion by imposing the tax on "Cadillac" insurance plans --
but in Dec2015, the Dems chickened out and postponed it until 2020. Then this year, Dems chicken out again.
Yet another difference between car insurance and health insurance,
even though car insurance sometimes gets complicated,
it is nowhere near as complicated as health insurance.
2
When will America wake up and realize that what is needed is health care not health insurance. Insurance companies decide who gets health care by who can afford to pay what the insurance companies demand. you people still don't get it. Insurance companies subsidize congressmen and senators so they will throw fear into the populace by saying how much health care will cost the country. Universal health care helps the citizenry, even with the taxes you will be paying less than half what you now pay.
6
@Tom
Before 1965, city and state governments provided healthcare to their residents through public health clinics and public hospitals. Charity hospitals picked up the slack. The federal government covered veterans through the VA system. People paid what they could afford.
Medicare covered the hospital costs for those over age 65 and Medicaid covered 50% of nursing home care for the elderly as well as 50% for the poor, which allowed cities and states to spend that money on other things and to increase executive compensation for administrators of government and charity hospitals.
Rather than running the costs for health care for those who can't afford it through insurance companies [with their 20% for overhead and profit] have cities and states provide public health clinics and hospitals. Let each state figure out the needs for their state and their populations.
I'm Canadian. I don't think of our health plan as brand of car. It's a bus and we're all on it, never under it.
12
@Anthony Jenkins I had a *Cadillac* plan when I worked in the US. I like my Canadian health care much better.
3
The optics are bad for Democrats. They have voted to do what the Republicans have been doing for 10 years; chipping away at the ACA.
It does not matter if the tax has not gone into effect. From a campaign point of view Trump can claim the Democrats agree with him the ACA needs to go and point to this vote as proof.
Tough to run as the party of health care when you are helping to dismantle your own plan, especially after it cost you as many as 1,000 elective offices to enact in the first place.
Remember, liberals, optics; not economics.
Health care premiums are based on the cost of healthcare in each state, so this Cadillac tax would affect states that have high health care costs, even though the plans aren't top-of-the-line. My single plan costs $12,000; I'm guessing that an identical plan in a mid-western state would be much less.
5
the only Cadillac health care plan that exists in the United States is that enjoyed by Congresspersons and federal workers. They have almost no deductibles, full prescription coverage and full coverage for any kind of hospital stay with minimal deductibles that are not even available on the private market. What incentive does Congress have to change a system from which they are benefiting the most? none. The status quo for the Congress people and their family is far better than any type of healthcare reform that they would make and I believe it is this selfish interest that is one factor preventing meaningful health-care reform.
I am recently divorced from a federal employee and therefore about to lose my Cadillac Blue Cross plan. I have been shopping on the open market for similar plans and nothing even comes close.
24
@Paul, the ACA did not exempt Congress. They are required to use an ACA plan. Most use an exchange in DC. See the excerpt from the law here: Section 1312 (d)(3)(D) of the Affordable Care Act.
@KLaL, Oops, Obama decided not to enforce that provision.
The law stipulated that Congress and their staff no longer had employer provided health insurance [effective 1/1/2014] and had to buy their own compliant plans through the individual exchanges or pay a penalty. They would get a subsidy to pay for it only if they were below four times the poverty level.
Had this provision been enforced, Congress would have fixed the defects in the law or repealed it.
As the regulations were being finalized, Congress and their staffs realized that the premiums were going to be expensive and the provider networks were going to be limited to the state [or DC] in which they purchased the plan. Very few were going to be eligible for taxpayer subsidies and even those who were were going to be paying far more in 2014 than in 2013. Since many O'Care plans pay nothing for out-of-network care, Congress and their staff would have to chose whether to be insured in DC or at their home location.
It didn't make sense for the ruling class to be treated like the masses.
Obama fabricated the argument that the federal government was a small employer, and that Congress and their staffs could purchase their insurance through the small business exchanges and the government could pay 80% of the costs, as was the case when Congress and their staffs were entitled to employer provided health insurance. So the "small business exchange" in DC replicated their pre 2014 employer provided health insurance.
@Paul
Looks like you’ll soon have a Yugo health plan.
2
There is something fundamentally troubling to me about characterizing generous health care benefits as something extravagant and frivolous and about taxing them as a potential revenue source. I heard the late Senator McCain exclaim with incredulity that some people "even get their transplants paid for." Huh? I can't think of anyone who would get a transplant unless they were in dire need of one for medical reasons. If they are talking about plans that cover cosmetic surgery or flying the insureds to a spa, ok, I could get behind taxing those. I think we need to completely redefine what is a "Cadillac" plan, and a plan covering only what is medically needed should not qualify as one, no matter how low the deductible or co-pays.
12
@Jane- McCain was talking about hair transplants
As a woman in my 60's who gets her insurance through the ACA, my bronze/high deductible policy would qualify as a cadillac plan. They need to recalibrate their numbers if they're going to be taxing and subsidizing the same plan!
7
Many non cadillac family plans are well above $12.000 America we have a problem. These are good plans but usually have co-pays of 20-30 dollars.
5
The Cadillac tax sounds like it's straight from a health insurance lobbyist. People and companies will buy "cheaper" insurance which covers a whole lot less. Then of course, those "cheaper" policies will go in cost as well and cover less.
6
“If it ever went into effect, the tax would either increase businesses’ tax burden or encourage them to offer their workers skimpier insurance.”
Bear in mind, these are Bentley plans, not Cadillac plans. I have exceptional health insurance through my employer, and it costs about $8,000 a year. If your health insurance costs $12,000 a year, I agree it should be taxed. Also remember that the $30,000 family cap is higher than the federal poverty rate for a family of 4.
1
@Mike
Really, if you are self-employed you can't even get a plan that would only cost $8-12,000. I would love to go back to paying that little. We can't get anything but the barest catastrophic for $8,000. Also consider that our $20,000 insurance plan is already helping to pay, as it has for years, for the families stricken by poverty. They can walk in to our hospitals, doctors' offices with their Medicaid or Medicare card.
1
I read these articles and think, "$30,000 a year for a medical plan"? Holy Cow.
Compared to the Cadillac plans you are describing, my medical plan is a Rolls Royce, a Bentley - perhaps a Maserati GT convertible - but for the price of a used high end bicycle.
Walked into a lab on Monday for some blood work and then to a local clinic for an ultrasound. I did not pay and will not receive a bill. The results were delivered to my family doctor on Tuesday. Because I live in Ontario, I will pay a premium each year through my income taxes that maxes out at $900 for those with an income exceeding $200,000. (Hence the bicycle comparison.)
It is not, and should not be, the responsibility of a corporation to provide the basic medical needs of their employees and their families. For some corporations in the U.S. this responsibility and the accounting and tax rules around medical care has actually led to their bankruptcy!
My basic medical care / health insurance, like the rest of the residents of my country, is provided by our government and paid for the most part by our income taxes. Our income tax rates are higher, but our property taxes for a comparably priced home are sometimes half or one-third of an American home so our overall tax "bite"can be far less than an American in a similar wage / housing situation.
Instead of arguing over taxing "better" health plans, why not focus on offering universal health care like every other civilized country on the planet?
89
I have a Cadillac, or better, quality health plan, referring to physician, hospital and lab care.
It's Medicare with a Medigap policy.
Fantastic care at what seems to me to be a very reasonable price.
I didn't include prescription drug care in the "fantastic category" in that it can be unpredictable in cost and you have to consider shopping for a new company if your medication changes increase your cost.
But, I don't blame people for being cautious about major change in their health care policy. There's a lot at stake to take a plunge into the unknown.
15
@RickP Several of my hard right, Trump supporting friends recently aged into Medicare. They claim their Medicare/Medigap combo is the best health insurance they have ever had.
My husband and I (early 60s) have a high deductible plan through his employer. As we are healthy, with limited chronic health problems, this allows us to contribute to an HSA. Even so, this plan would likely be considered a "Cadillac" plan by the ACA's definition.
My own personal health care plan involves daily exercise, good diet, no smoking, limited alcohol and drugs (prescribed, legal or illegal), and enjoying life. The truth is that for many humans, basic life choices can drastically limit your need to access the health care system.
The problem: There is too much health care .. everybody wants everything now. There is also a small percentage of individuals that consume outsized amounts of care.
Basic health care is not expensive unless it's overused ... providing basic care is easy. But -- even when it's provided people still go to the ER.
You can't provide someone tax free coverage and have someone else paying with taxable income. The unions may not like it -- but , the very people struggling to pay premiums are subsiding all those who get employer care. There has to be some limit ...
4
The problem is that health care insurance is rising every year so it's very hard to avoid this 30 K cut off. And what they call "Cadillac" is actually just basic health services (at least in California). Also, I think this will affect not just union employees but those who are self employed (who are their own employee and employer).
6
The original argument for the Cadillac Tax was that it was artificially keeping salaries down. It is cheaper for a company to recruit employees by offering a more expensive health insurance package (since it is tax free) rather than offering a higher salary (which is taxed). So the theory was that the Cadillac Tax would result in higher salaries. The unanswered question was whether the employee preferred a more complete insurance package or more money in the paycheck.
1
Employers are going to say we do not have a dog in this hunt. Our costs stay the same, if politicians want to raise taxes on our employees, those politicians will have to directly discuss that demand with our employees. We pay in salary whatever the market will bear. We are not going to triangulate the impact of taxes, salaries and household circumstances.
1
The correct solution is to get rid of all tax subsidies for employer-sponsored health insurance. Do this as part of the public option, or Medicare For All Who Want It.
10
We are comparing American insurance plans to American automobiles because the American medical system, like the American car industry, is very good at providing high-end, luxury service products. However, we are not so good at providing basic, everyday service products at low costs, and other countries are out-competing us in this category. The comparison is valid.
11
In Maine, if you have an individual plan, are over 55 and have a deductible lower than $3,000, you're in Cadillac territory. 25 years ago, $500 was a high deductible.
15
I'm an independent that leans conservative. Own and run a corporation (a mid-sized, successful business with several hundred employees.)
Despite the cynical, demeaning attitudes towards conservative business people, I - and many of my friends - consider it our responsibility to take care of our employees. My people work very hard for me, and the last thing I want is for them to have any worries about their health, or the health of their families.
(My partner and I are kind of extreme about this - I had a long term employee that had a scary heart attack in my home office, and within a month we had a defib device in the office, and everyone had gone through training.)
Point is, while it has always come out of my bottom line (and hence the personal income of my partner and I), we've always offered rich benefits. Health, dental, vision, STD, LTD ... used to pay 100% of employee benefits, and 80% of family benefits (we had to lower it to 80%/60% just to remain competitive after the ACA.) We have always considered that was part of doing ethical business.
The cost of benefits are not political or philosophical to me - they are something I have to look at during every quarter's budget meeting.
The Cadillac tax is simply a bizarre concept. And any "economist" that thinks it is a good idea is probably working at a university, with guaranteed benefits.
Penalizing me (and every other ethical businessman) for being fanatical about taking care of their people is just ... insane.
51
@JRC
You are a morally motivated employer. Economists generally don't take moral motivations into consideration.
I'm an academic librarian at a public university. As you suspect, I have a "Cadillac" insurance plan. (The university self-insures.)
But rather than using it to pay for all but $500 for a $5500 pair of hearing aids, I bought a single hearing aid online for $600. Like you, I see insurance as my responsibility to help my less-healthy co-workers. So I cannot agree to waste money while a co-worker was recovering from brain cancer and others also have much greater needs than I do.
I too did this from a moral motivation. I eventually got my $600 covered. But I didn't expect my out-of-network purchase to be covered.
My understanding of healthcare economics is that it is all about trying to solve problems for which markets don't work. One kind of solution is moral. But then agreement is difficult. My motives are socialist, not conservative. I'd have trouble trusting that business owners would *all* behave like you do.
But you are definitely doing the right thing!
5
@JRC
The problem is some are forced to pay on the open market with post tax dollars -- your benefits are tax free to the employee.
Why should some get 30k tax free and other have to pay post tax .... it's not fair.
I'm paying $1100 a month per single employee for a very good HMO with only copays -- not sure how long we can do it. Obviously, families are much more.
4
@JRC
"...consider it our responsibility to take care of our employees."
The perfect disingenuous phrase for employers to hide behind. Instead try this: we consider it essential to "controlling" our work force, to avoid giving wage raises, to keep workers chained to the job & keep them from finding better pastures.
Instead of a Cadillac tax, I like a slightly different idea. First, offer a 'Medicare for All" alternative, with a tax rate as needed to fund it. Next, require corporations, if they end current private health insurance for employees to push them into "MfA", to increase employee salaries by the full private plan cost. Tax the "MfA" costs at the "MfA" rate, and tax the rest of the difference (if any) as ordinary income, at regular income tax rates. Sunset this requirement after 25 years or so.
If my employer is right, the cost of my current health insurance is ~$12,000. Add on my personal copays, deductibles, and although a number of things are not covered, it is a good plan. As I am single, it is, apparently, a Cadillac plan by the article's numbers. This represents about 14% of my salary. So if the "MfA" tax is less than 14%, I come out ahead. Right now I'm paying Medicare taxes too, - in addition to not getting the $12K. For me personally, "MfA" might be a small increase in after-tax income. YMMV, of course. Every person will be different.
One thing is sure - if "MfA" is implemented without requiring this, corporations will push everyone to it if they can increase profits, and the employees will not see the any of the total costs difference come to them.
8
Although it is clear that this tax would raise revenue, I am skeptical that it would reduce health care spending (in contrast to health insurance spending). It a plan reduces or eliminates my deductible, reduces my copays, and allows me to access a wider range of doctors, it will save me money, but not affect how much health care I access. Somehow there is this idea that people really like going to the doctor and having procedures done, just like going on vacation or buying a nice car or home. If someone declines a procedure mainly due to poorer coverage by their health insurance plan, they may be going without the best possible medical treatment - not obvious that this is a good outcome.
9
@Larry Figdill - Unfortunately, people do make decisions based on copays and prescription costs.
In our office, we see many people not come in for follow-ups because of the the deductible - even when they are on medication that must be monitored, or need further evaluation to determine how to alter treatment.
We have people who will go blind because they cannot afford the cost of seeing a specialist; or cannot afford transportation to see the specialist who takes their insurance.
Medical pricing is relatively inelastic, but is bimodal. If you are comparatively well off and can afford treatment, you seek it out regardless of cost, and don't seek it when unnecessary. If you are on the low end of the wealth scale, you don't seek it out at all if the copays, deductibles and frankly, transportation and lost wages make treatment unaffordable. For our patients - those stuck with low incomes but not eligible for publicly funded low income plans, they just choose to hope they don't go blind.
You are right that taxing rich plans won't change health care spending: our system relies on putting the decrease in spending on the backs of the less fortunate.
21
@Cathy I agree completely. Even the notion of a deductible is biased against poorer people, who may avoid getter care altogether since they have to pay everything at the start. Deductibles and copays are designed to save insurance companies money, not to properly influence the use of medical services.
5
A Cadillac plan like teachers in many California public school districts as well as their cohorts in public sector unions have negotiated. Zero deductible, zero copays, maximum out-of-pocket costs = Zero. Connection with reality, also Zero.
11
@Kent Krizman I am a taxpayer advocate. Your statement is not based on reality. I don’t know a single CA local government with “zero” anything. Most have had to raise copays and deductibles as health costs spiral unchecked.
@Peter
Check out NYS. My sister is a municipal employee and pays nada. My mother is a retired municipal employee and the county reimburses her Medicare premiums and provides her with a supplement that pays all but a $20 co-pay. She retired at age 64 after working for 18 years and is now 90. She's been collecting medical benefits and a pension for longer than she worked for the county.
@ebmem I don't know about your mother, but 90 year olds with pensions are in good shape. Pension laws have changed since then--for that reason. What your mom has doesn't exist anymore.
I'm in an employer plan. I picked what I thought was a good plan. I paid more for it. I had a choice of less expensive ones; I studied co-pays, deductibles even prescription costs before selecting.
One prescription co-pay was $10 last month, it shot up to $70 this month. I didn't find out until I went to pick it up and my co-pay for it and another drug was $100. I was shocked, told them to put it back and called my ins co
My ins co explained about the Tier system. Tier I drugs have the smallest co-pay. My ins co exercised their right mid-year and re-classified my required meds from Tier I to a lower Tier. No notice They suggested a generic equivalent. I'm already on the generic. They also suggested that I look into mfg. coupons or another plan, like a well-known supermarket's plan. You pay the supermkt an annual fee and get drugs at a discount. My prescription that cost a $70 with my insurance copay cost $25 with the supermarket's plan. That's what I did
My point is you can get a "Cadillac" plan, you think, and at any point during the year the insurer can exercise their option to change what they want to cover. . I pay what an uninsured person would pay for meds now;and for two plans. Can't get out of the other plan until end of year. This ain't Cadillac. So tax it?
I think this is how insurers are getting out of paying. The co-pays and deductibles will just become too expensive.
29
@Ann
My brother, who is insured by his employer, suffered a health emergency last year. He later received a $38,000 bill in the mail, as the insurer had denied the claim because he had failed (while knocked unconscious!) to call in and ask for "approval" before seeking care. Lucky for him, the benefits manager at his company was able to convince the insurance company to back down.
Those of us who are self-employed don't have "benefits mangers," and the amount we pay for a Bronze Plan with a $7000 deductible is higher ($12K per year in the case of my spouse and myself) than what employers (and other big buyer groups, for example unions) pay for far more generous coverage.
The purpose of the Cadillac Tax was to level the field for the self-employed, whose health insurance premiums must be paid directly out of their earnings. The ultimate idea was to widen the risk pool by making the plans on the ACA exchanges more attractive (and affordable) than employer-provided insurance. When the Cadillac Tax was delayed, that was pretty much the death knell for "Affordable" health insurance via the exchanges.
Once again, Wall Street wins by pitting one group of workers against another.
27
@Ann
Helloooo...that's the way the insurance loopholes have been used for decades. You are just seeing it now because you are experiencing this first hand. That magic 25% copay on everything from MRI to doctor visits have kept people from seeking healthcare. That's the real "insurance" to insurance companies against paying out to cover the bills. Kaching, Kaching, hear the sound of that money from a golden goose, laying those golden egg$$$$ 24/7.
1
@Ann
An acquaintance mentioned that her co-pay for a Tamiflu prescription she bought for her daughter was $100. She was glad she had good insurance and wondered what people did who didn't have insurance. When I got home, I checked Good Rx and the price for the uninsured was $40. Makes you wonder where the money is going if someone is getting a lower price walking into a chain drugstore than the insurer or pharmacy benefit manager is able to "negotiate."
1
I think it's called the Cadillac Tax because the more accurate Mercedes Benz Tax doesn't roll off the tongue so easily.
7
What is employer provided health insurance if not income? Why shouldn’t it be taxed? Presently, and for many years, the first $50,000. of employer paid life insurance is not taxed. Anything over $50,000. is taxed. In both cases the employer is taking the cost as an expense. What part did insurance company lobbying play in creating this ‘carve out’? As for unions hating the Cadillac tax —-unions ask the public for solidarity when they’re in a struggle with their employer but are strictly ‘I’ve got mine and the hell with you’ on this issue (and many others.)
20
@Doug
It should be taxed like income. But any politician who suggested doing that would find themselves facing down constituents carrying pitchforks and torches.
13
@Doug we are self-employed and also going to be taxed 3.7% on our $20,000 plan. Imagine paying taxes on money you earn, but, have no choice in paying it to, or buying a plan from some bloated health insurance company.
It’s difficult enough to get ahead without adding another tax to the middle class. People can’t afford their deductibles as it is. Stop needless wars and wasteful spending. Repeal the tax cuts and tax CEOs who are taking unconscionable salaries at the expense of their workers. So called Cadillac healthcare is just basic care that everyone should have. Taxing healthcare is a terrible idea.
1
ACA’s definition of a “Cadillac" plan is a joke. Let me demonstrate. The health plan the small company I work for offers is a Cadillac plan under the ACA. Yet, it is a vanilla group PPO plan, one of the most common in the state. The plan requires a pre-authorization for most routine non-emergency procedures, even rather trivial ones, or before I can see a specialist out-of-state. The co-pay is 20% in most cases. So, contrary to the proponents of taxing such plans out of existence, there is absolutely nothing unusual or “deluxe” about my health plan; neither is our staff “older and sicker” - quite the opposite: as a group, we grossly “underutilize” the plan and get a discount for that…. Visit a doctor’s office or a hospital just about anywhere outside the United States, and you will immediately see that the biggest problem with the American healthcare system is the abundance of paper-pushers who feed off the healthcare monies while contributing nothing to diagnosing and treating the patients. This includes the insurance companies, an army of lawyers who keep malpractice premiums sky-high, an even bigger army of clerks at medical offices and HR departments whose only job is to handle insurance plans and claims, and so on. The ACA not only did nothing to address this problem - it added at least 125,000 “compliance officers” and other paper-pushers to our healthcare industry. Also, the ACA saddled the doctors with exponentially more record-keeping duties. Fight that, not my plan.
36
With thousands of insurances, the doctors have to keep all this paperwork, otherwise how could they keep track of patients and their insurance. Only MFA could decrease the paperwork.
3
@AT
solution: single payer---like every other modern civilization on the planet has it.
1
Comparing health care to cars is a very useful undertaking (no pun intended).
The auto industry’s sales of new cars amounts to 3.5% of U.S. GDP.
Whereas, Health-care amounts to 17.8% of U.S. GDP.
New car advertising, in the U.S. (though not the rest of the world) is ubiquitous on our annoying TVs, is typically based on ‘selling’; prestige, power, sex, style, and self-image — and is quite successful.
However, the vastly higher profit margin of health-care drugs and insurance on even more heavily advertised and far more annoying TV commercials is based on something more powerful, ‘fear’ of death.
The entire propagandistic model of advertising and ‘selling’ stuff and services to the America people as only ‘consumers’ (and NOT as free people, nor democratic citizens) is, IMHO, best described in the late great Earl Shorris’s book, “A Nation of Salesmen”.
Shorris, in his death-bed article from cancer, published In Harper’s, “American Vespers, The ebbing of the body politic”, also provides the most compelling analogy between the effect of cancer in humans and which ‘empire-thinking’ has on our democratic body politic.
4
Ok gang, let's bottom line it again.
Establish a national, adorable, quality health care plan for all Americans just like almost all of our peer countries have.
It should not be free but should be affordable.
If somebody wants a Cadillac plan, charge them more for it.
If somebody abuses it on either end, ie the hypo who goes to the doctor 360 times a yr. or the macho neurotic who never sees a doctor then incurs massive bills, make them pay more, while insuring basic affordable, quality care.
15
"Some deficit hawks also like the Cadillac tax, since, in addition to pushing down the price of health insurance, it was also devised to raise money to pay for other policy priorities."
I had to chuckle at this sentence. For Republican lawmakers, "other policy priorities" means more tax cuts that mostly benefit corporations and their wealthy donors.
By the way, what ever happened to Trump's campaign promise of "beautiful health care"? Or does that come next, after getting Mexico to pay for his wall?
28
The political impossibility of implementing a tax on high cost, tax-sheltered health plans is a good example of what would happen if the US ever tried to implement a tax on carbon to address climate change. The American public will not accept any tax that increases the cost of products or services they currently purchase or receive as a part of their compensation, regardless of the merits of any such proposal.
The origin of this problem is the decision to exempt employer-paid healthcare benefits from income tax. Once a tax benefit is granted, it is nearly impossible to limit it or take it away.
The notable exception is a tax increase passed by one party that primarily increases taxes for members of the other party, such as the recent change to the state and local tax deduction.
9
I watched the debate over this at the time of the ACA - the thinking was that corporations and insurers would put costs ever higher without any disincentives - so the tax would move them to force more costs onto the employees (as we have seen - our deductibles are over 6500 a year now and our premiums have doubled) so that we would become more likely to support a single payer system of healthcare, which is what the ACA was designed to lead to. I for one was always up for single payer, having family and friends in the Eu and Canada. I now worry if this tax is repealed it will make no difference to what my company and the insurers do - premiums and deductibles will still go up each year, but the push to single payer may be moderated as unions will be "happy" with status quo. Once again we bumble our way past an opportunity.
11
@E Campbell
Could play out that way. I do sometimes wonder at our impression of the power of unions these days. I think they're less than 15% of the labor force. Interesting to see what happens -- but wish the outcome didn't affect us all so much!
1
@E Campbell
"I now worry if this tax is repealed it will make no difference to what my company and the insurers do - premiums and deductibles will still go up each year, but the push to single payer may be moderated as unions will be "happy" with status quo. Once again we bumble our way past an opportunity."
Precisely! The FIRE industries always win by pitting us against each other. That's what the so-called "controversy" over single-payer health care is all about.
2
this was just another way to divide middle and lower classes. it would barely have a dent on the upper class, but for middle class workers who had good health care, this would take it away and give more to the poor. we need to stop taking away from the middle class, or it won't matter if we do help the poor.
17
@Andrew
You're missing the point. The rich are trying to eliminate the middle-class. All they want is them and the poor. When you're poor, you're desperate and they have you right where they want you. Violent revolution seems to be the only answer left.
13
Consumer Reports: "Toyota tops for reliability -- and Cadillac is last."
High cost, low quality - seems to me the metaphor fits perfectly.
21
@Miss Anne Thrope
ahem: my 1995 cadillac deville is deemed excellent by my insurance co and her mechanics. when i brought her to the bodyshop for a paint ding repair, they were arguing over who would buy her - not that she's ever going to be for sale.
while she was at the bodyshop, they lent me a toyota something. slidy on wet pavement, no good in a stiff breeze.
4
The article fails to mention the fact that the threshold for the tax rises with general inflation, not the generally higher rate of healthcare inflation. As a result, just like the AMT, it would gradually affect more and more people, by most estimates nearly half of all plans by 2030. Furthermore, because its rate is higher than everyone's marginal income tax rate, it makes increases in health benefits even more expensive than salary increases. No one was expected to offer any new plans subject to the tax. It would only raise revenue by pulling a cynical bait-and-switch on unionized workers and others who had already negotiated generous benefits packages in the past. As for the economists, 100% of them were for free trade too, and we all know how that turned out.
37
@Larry "It would only raise revenue by pulling a cynical bait-and-switch on unionized workers and others who had already negotiated generous benefits packages in the past."
This is EXACTLY what happened to our union. We had a so-called Cadillac plan which many of our members, including me, have walked picket lines for. A few years back our company, Mountains of Cash Inc., moaned and complained about how much the Cadillac Tax was going to affect them. Our union buckled and we took an effective pay cut with increased deductibles, monthly fees and co-pays. Meanwhile, Mountains of Cash Inc. has had an effective tax rate of zero for much of the past decade+. Now I see the Cadillac Tax may be repealed. You can't make this stuff up. If the repeal goes through, I will be looking for some claw back from my union next contract.
1
@Larry
Good points! I’m self employed and I pay $1052 per month for health insurance. To whom shall I pay the Cadillac tax—myself?!