The 40% tax on so-called Cadillac health insurance plans will hit the vast majority of plans over the next decade. Here is one of the finer points that was missed in the health care debate: the "Cadillac" tax wasn't indexed for inflation. From the NY Times:
. . . Bradley Herring, a health economist at Johns Hopkins Bloomberg School of Public Health, suggested the result would be more widely felt than many people realize. “The reality is it is going to hit more and more
people over time, at least as currently written in law, ” he said. Mr.
Herring estimated that as many as 75 percent of plans could be affected
by the tax over the next decade — unless employers manage to
significantly rein in their costs. . . .
The trend is accelerating. The percentage of employers revising their
plans as a result of the tax has increased to 17 percent this year from
11 percent in 2011, according to a survey of United States companies
released this month by the International Foundation of Employee Benefit
Plans. . . .
This makes no economic sense. Suppose that you want to get rid of tax credits for health insurance. First, you aren't getting rid of them. You are replacing these credits with income based transfers under Obamacare. Second, the 40% tax rate is unrelated to the income tax rate that people are paying. This 40% tax rate means that lower income tax rate people will face greater disincentive to get Cadillac plans than higher income individual. Obamacare is making the system amazingly complicated.
Labels: brokenpromiseshealthcare, brokenpromisesobama, obamacare