Thursday, October 1, 2009

Cadillac Plans

Story on what constitutes Cadillac plans...which is important because of the Senate Finance Committees proposal to tax high cost plans (the amount over a trigger, currently $21,000 family, $8,000 individual, but including dental premiums and amount put into flex spending accounts).

I realize I am verging into broken record territory, but a better policy is to cap the tax exclsuion of employer paid insurance premiums. I would cap it lower than what is implied by the current policy (say at the mean, but only for employer paid premiums, $13,000ish family, $5,000 individual). This would raise about twice as much money over 10 years (~$450-$500 Billion v. $215 Billion) and it could be put toward improving affordability of persons being compelled to buy insurance.

The argument goes that as long as we have uninsured persons who would have to pay premiums with after tax dollars, we are simply going to limit the amount of federal subsidy of private insurance that people can have. You can have more insurance, but there is a limit to how much tax free income can pay for your insurance. This will slow health care cost growth, which over time will make insurance more affordable. I realize this makes some people worse off, and I realize they are not all CEOs of multi-national corporations. I also realize that some states are higher cost and people will be differentially affected....but that is part of the point.

I think much of the public has a hunch that the status quo is unsustainable. And that saying this is one (painful) way we are going to change things would be met with some appreciation, even amongst irritation at (some) losing benefits.

1 comment:

  1. Professor, You seem to have missed a Key problem (as have many of our Senators, Representatives and most of the press). We are short of primary care physicians. If we pass a bill adding about 18% to the patient load we will create a major problem that will seriously impact the current satifactory care being received by 80%+ of current insureds.
    ABC deserves credit it seems the only news organization that has recognized this problem. Lets not rush a bill to aome artifical deadline. Lets think carefully and deliberately about any changes to be made. Above all, "Do No Harm! By the way among the plans to be considered after we solve the primary care problem the Swiss plan should be considered. For once I agree with Paul Krugman
    Morton Lurie Raleigh, NC