Healthcare

Uniting Behind the Divisive ‘Cadillac’ Tax on Health Plans – NYTimes.com

Here is what the Obama administration experts think about you and health care:

But as with a glass of red wine with dinner, too much of a good thing creates new problems. If people have insurance that pays for too much, they don’t have enough skin in the game. They may be too quick to seek professional medical care. They may too easily accede when physicians recommend superfluous tests and treatments. They may not try hard enough to buy services from the lowest-cost provider. Such behavior can drive national health spending beyond what is necessary and desirable.


Source: Uniting Behind the Divisive ‘Cadillac’ Tax on Health Plans – NYTimes.com

And they also say this:

Might companies use the Cadillac tax as an excuse to reduce health coverage and, instead of increasing wages, simply pocket the savings? Some may try, but the success of this strategy would be fleeting. In the long run, the compensation of labor, like most prices in the economy, is governed by supply and demand. Any employer that tries to pay less than the market requires will struggle to recruit and retain workers.

The resulting wage increases from this policy are sizable. Jason Furman, chairman of the Council of Economic Advisers, estimates that take-home pay will increase by $45 billion a year by 2025. By comparison, according to a 2014 report by the Congressional Budget Office, increasing the minimum wage to $10.10 an hour, from $7.25, would raise wages for low- and middle-income families by only half as much by the time the incremental increase would have been completed.

Perhaps you should just show this to your employer. Tell your employer you understand why you now have a $5,000 family deductible and pay 40% of the cost if you go out of network and pay 30% of the monthly premium. Tell them you will do whatever is necessary to avoid all the unnecessary care you and your family have been receiving.

And while you are at it, ask your boss when you can expect that raise to replace your lost benefits. Employers have been trimming benefits and raising cost sharing for years with no shortage of willing workers and no sharing of the savings.

Or, you can quit your job and find a new one where the company delights in paying the 40% Cadillac tax on your very ordinary health benefits.

Also show this to your doctor so he or she knows you don’t want superfluous tests.

And for those of you paying budget busting health care you actually need; tough luck.

Here’s the real irony in all this, the same people who believe the above are the same people who want a single payer Medicare for all system with virtually “free” health care. These are the same people who profess concern about struggling low and middle-income families, but apparently not the financial burden cutting their health coverage causes.

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3 replies »

  1. Remember that wages must increase by approximately $1.33 for every dollar of tax preferred employer spend on health coverage to leave the employee in the same position as she/he is today. Because almost all employers vary their level of employer financial support based on who enrolls, it means that, to leave the worker in much the same position as they occupy today, an employer must vary wages based on who enrolls in health coverage. They are not going to do that.

    Similarly, because the employer financial support for health coverage is REGRESSIVE as to wages, it represents a much larger percentage of a lower paid worker’s total rewards than the percentage of a higher paid worker’s total rewards. Does anyone think, absent the tax preference, that employers will incorporate new wage increases that will favor lower paid workers in the same manner – based on whether they enroll in health coverage, and whether they cover their dependents?

    This is just one more example why academics like Professor Gruber and Professor Emanuel (and Professor Obama) don’t understand corporate America let alone corporate employee benefits (including health coverage) – in large part because they have only had limited experience with for profit firms.

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  2. It seems to me we have went from getting preventive care (HMOs) to stop going to the Emergency Rooms because you do not have a family doctor if you get sick to being accused of getting too many preventive tests and going to the family doctor when it is not needed because we do not have skin in the game.

    I for one do not have the time to go to the doctor and hate test so I never ask for any. Half the time the test seem like they are done to prevent lawsuits and other times they are dictated by the insurance companies. I once had a knee injury where I could not walk for over a week. My doctor knew it was a soft tissue injury but the insurance company made me get an X-ray which showed nothing then they approve the MRI which is what the doctor wanted in the first place.

    In fairness to the employers, the rate that medical insurance is rising, any shift in premiums costs to employees to save the Cadillac tax will only free up enough cash to help pay the employer portion of what insurance premiums they do provide. All of these reports must have mistakenly assumed no rise in insurance rates or they assumed that companies were going to make more profit to share as pay raise to offset costs. I guess they are wrong on both parts.

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