Hypothetical Mean

Commentary from an Actuarial and Economic Perspective

Forcing Everyone to Sell their Cadillacs

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Bob Herbert from the New York Times concisely and accurately described the so-called “Cadillac” tax today.

… it’s a tax that in a few years will hammer millions of middle-class policyholders, forcing them to scale back their access to medical care.Which is exactly what the tax is designed to do.

The tax would kick in on plans exceeding $23,000 annually for family coverage and $8,500 for individuals, starting in 2013. In the first year it would affect relatively few people in the middle class. But because of the steadily rising costs of health care in the U.S., more and more plans would reach the taxation threshold each year.

Within three years of its implementation, according to the Congressional Budget Office, the tax would apply to nearly 20 percent of all workers with employer-provided health coverage in the country, affecting some 31 million people. Within six years, according to Congress’s Joint Committee on Taxation, the tax would reach a fifth of all households earning between $50,000 and $75,000 annually. Those families can hardly be considered very wealthy.

I am a proponent of high copay/deductible plans for those who can afford it.  I am an even greater proponent of letting people freely select the plan that they can live with.  This policy will force millions of people onto the plans that I like.  I do not approve of using the government in an under-handed way to accomplish policy objectives that I think are good.  We need to convince people to voluntarily buy these plans, not coerce them.

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Written by Victor

December 29, 2009 at 4:03 pm

Posted in Healthcare Reform

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