At Work

Why politicians screw up health care- the Cadillac tax

About half of all American adults get health insurance through their employer, and beginning in 2018, the government will impose heavy financial penalties on any employer-provided health plans it deems overly generous. The tax was designed to rein in health care inflation and raise tens of billions of dollars.

Former Sen. Jeff Bingaman, D-N.M., a member of the working group that created what’s come to be called the Cadillac tax, says if companies were more demanding shoppers, then insurers — as well as doctors, hospitals and other health care providers — would have stronger incentives to keep prices low.

“I think we saw it as a way to keep the cost of health care from continuing to grow at the rate that it had been growing,” Bingaman said.

Excerpt: Kaiser Health News

IMG_3032Having been an employee benefits professional from 1961 until I retired in 2010 I can’t tell you how stupid the above comments are. First, virtually all large employers covering about 70 million Americans are self-insured; there is no insurance company involved to be a demanding shopper with. These employers design the benefits they want or which are negotiated with their unions. It is these plans (but mostly plan participants) along with government plans that will be most affected by this tax.

To assume that employers of any reasonable size do not do everything feasible (and many not feasible) to manage health care costs is a ridicules assumption and a bit ironic given many of the most generous and expensive plans cover public employees. For decades employers have been leading the way trying any number of designs, incentives and penalties aimed at health care providers, administrators and employees to control health care costs.

This tax is just one example of policy makers and their academic experts not understanding the real world.

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Categories: At Work, Government, Healthcare

4 replies »

  1. If I am not mistaken, each state had its own rules for the insurance industry (health, car, life). That too makes it hard to get the same rules and same policy coverage for everybody in one large company. I know currently employees commute from at least 4 states for our plants in South Jersey and who knows how many states for our other business units in other states. Then there is always the retirees.

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