Update: The Cadillac Tax Will Raise Far Less Than Projected and Won't Control Costs

[nightrain]

Update: The Cadillac Tax Will Raise Far Less Than Projected and Won't Control Costs

<snip>

If health care costs continue to spiral, premiums will rise apace. Meanwhile, the threshold defining expensive plans will climb slowly—it will be indexed to the consumer price index plus one percent, far below the average annual rate of health care inflation. As a result, premiums will quickly begin to catch up with the thresholds.

Mercer, the benefits consulting firm based in New York, predicts that by 2016—just three years after reform kicks in—the tax could affect 24 percent of the nation’s employees. (This number may be high; no one can predict how many plans will be exempted after adjustments for older workers, women and high-cost states).

But those employees who are affected will almost certainly face higher out-of-pocket payments. Here’s how the tax trickles down to employees:

Under the proposal, insurers will be required to pay a 40% tax on high-cost plans. They will then pass that tax on to employers who continue to choose these plans in the form of even-higher premiums. To avoid that added expense, most employers will probably switch to less expensive plans. Under reform, all plans will be required to offer a fairly rich package of “essential benefits,” so the only way to find a cheaper plan will be to look for one with higher co-pays and deductibles.

Thus, the burden will shift to employees. The tax’s supporters argue that this will help rein in health-care inflation. Because they will have more “skin in the game”, employees will become more prudent in their use of health care, going to the doctor less frequently, and avoiding unnecessary tests and treatments.

But, as I noted yesterday, research shows that when patients face high co-pays and deductibles, they are just as likely to skip needed care as they are to avoid overtreatment. And, when they put off necessary care, at some point down the road, they become sicker, and many even land in the hospital.

Recent experience confirms the research. As employers who can no longer afford sky-high premiums shift costs to employees, co-pays and deductibles have climbed. Yet health care spending continues to spiral as Americans undergo more procedures, see more specialists and pop more pills.

If “skin in the game” was going to control spending, one would think that it would already have begun to “bend the curve” of healthcare inflation.

I would also point out that in developed countries that have done a much better job of holding down health care costs, their citizens often receiving “first dollar coverage, ” paying nothing when they receive care. Their governments don’t try to force patients to ration themselves; they regulate prices and put caps on volume. And their hospitals and doctors are more likely to follow evidence-based guidelines to lift the quality of care while lowering costs. Recently, I’ve written about how Norway has all but eliminated hospital infections, while France’s hospitals have adopted checklists that we know greatly reduce costly medical errors.

Finally, I can’t help but recall the House’s alternative to a “Cadillac tax”: raise income taxes on Americans earning more than $500,000. Even with the hike, the richest 1% would be paying no more than they did in the middle of the 1990s. It was such a simple plan. . .

Source--
Maggie Mahar
Jan 15, 2010
http://www.healthbeatblog.com/2010/01/update-the-cadill...

[midnight]

1. If this administration wants to save money start listening to Dr. Dean...

[golddigger]

2. The GD:P Brigade will

be here any minute to set Maggie Mahar straight.

[nightrain]

3. perhaps.... but I trust Maggie's expertise more.

[truedelphi]

4. There is no government like our government

Clearly an auction that benefits only those who have the lobbyists and the Big Name Corporate Brand Thieves to sway our legislators and our Chief Executive.

Go Rahm. Go Obama. Go Congress.

Screw the Little Guy.

[bvar22]

5. Correct me if I'm wrong, but I seem to remember....

...that Obama campaigned on paying for HCR by taxing those who made above $200,000/yr?

I could be wrong because I also thought he campaigned on a Public Option, but the "squad" on DU have told me I'm mistaken.

[nightrain]

8. yes, I think it was either 200K or 250K. Squad is often mistaken.

[Demeter]

6. Of Course It Won't

That wasn't its purpose. The tax was designed to punish unionized workers for negotiating Management into a corner all these years.

[GinaMaria]

7. not just unionized workers but

others as well. When you look at the people this would impact both union and non-union there's one common thread. Hurt the middle class. These plans are comprehensive coverage plans. Most of these are group insurance where cost and risk are spread out among a large group. The ploy here is to get you thinking about how you are paying for older workers, sicker workers, other people's chronically ill children etc. and make a decision to go off on your own and purchase your own insurance. This is exactly what insurance companies want. This is their profit plan for 2010. The biggest profit for them is individual plans. Especially individual plans with high co-pays and deductibles. Those increase their profits even more. People will be reluctant to get even basic care... more money for the insurance companies. So the middle class gets poorer and sicker. They need to 'bend the cost curve' which actually means increase profits.