Cadillac Health Plan Tax Looms Large

A new report on the Cadillac Health Plan Tax provision of Obamacare has traditional allies of the president criticizing this aspect of his signature accomplishment. The left-leaning Economic Policy Institute (EPI) recently concluded in their report that this tax will wind up hurting average workers.

The Cadillac Health Plan Tax was sold as a tax on executives getting huge tax-free benefits in the form of overly generous health plans that encourage inefficient healthcare delivery. The reality of it is turning out a bit different. Says Elise Gould, Director of Health Policy Research at EPI:

Expensive plans are not necessarily more generous plans. Many health plans are expensive because the employee population is older or sicker than average, and not because they provide more generous coverage.

Employers are already taking action to avoid getting hit with the tax, which takes effect in 2018. The size of the tax has their attention. And it has them looking hard for ways to bring down the cost of their health benefits. Says  Larry Boress, the chief executive of the Midwest Business Group on Health:

You’re getting taxed at 40 percent. That kind of hit is something that is viewed as untenable by employers in general.

Employers report that they are more focused on dealing with these tax provisions for 2018 than the changes that happen in 2014 when the major provisions of Obamacare come into effect.

It remains to be seen what the true impact for this Cadillac Health Plan Tax will be. It may drive out wasteful spending as originally intended. Or it may serve as an excuse for higher deductibles and lower health benefits for average workers who can’t afford it.

Click here to read more in the New York Times, here to read more in the Washington Post, here to read more in the Huffington Post, and here to read the report from EPI.

1959 Cadillac, photograph © Bob Jagendorf / flickr

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