December 10, 2009

There's a rapidly growing body of research showing that the Senate tax on high-cost health plans (misnamed "Cadillac plans") is a really bad idea. For example, the Mercer consulting group found that 19% of employer health plans would be affected by the tax in 2013, its first year. (That contrasts only slightly with the CBO's estimate that 19% of plans would be affected by 2016.)

That's one out of every five plans. And, as we explain here, that means this tax will affect coverage for more than one worker in five. So "Cadillac tax" is a misnomer - this tax would hit middle-class people far more than it would wealthy executives. It would further erode the social safety net for working families. And more critical information was published today that could turn the tide.

In what might be the biggest development - at least as far as Washington policy thinking is concerned - six researchers have provided a thorough debunking of the tax's supposed benefits in the respected journal Health Affairs. I've summarized those papers here, but this is the gist: There is only a very weak connection between plan cost and plan design, so a tax that leads to a reduction in benefits (or higher premium costs) unfairly targets people for forces that are beyond their control.

A lot of folks in Washington like to pretend there are mythical union people out there somewhere savoring the fruits of their lavish health plans, perhaps by enjoying a free massage while Deepak Chopra whispers meditation instructions in their ear. Meanwhile everybody else get only the care they bought fair and square. That's the American way, right? But the fact is that most people in these so-called "Cadillac plans" are in them because they or their fellow employees are sicker than average, or because of other factors they can't change. Taxing them for that is immoral and wrong. It's a way to pay for health reform without taxing the wealthy, as the House has proposed to do, by placing the burden somewhat randomly on middle-class people instead.

That's why the tax has to be stopped.

(Disclaimer: Sorry for all the linking to myself. I'm working with the Campaign for America's Future to stop this tax, so we're pulling together all the data we can on the topic.)

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