Coverage for 175 Million Americans at Risk

As seen in today's California Healthline, a great piece from Katy Spangler with the American Benefits Council:

Coverage for 175 Million Americans at Risk

While the Cadillac tax sounds like it applies to a small handful of individuals with luxurious health coverage, the truth is the health care that 175 million Americans like and want to keep is at risk because of this tax. Hardest hit will be retirees, low- and moderate-income families, public sector employees, small businesses and the self-employed. The tax must be repealed.

The Cadillac tax is a 40% non-deductible excise tax on the value of employer-sponsored health coverage that exceeds certain benefit thresholds -- initially, $10,200 for self-only coverage and $27,500 for family coverage in 2018.

The tax was clumsily constructed and thus penalizes employers for factors that are completely out of their control, impacting employers that have a higher number of disabled workers, unusual cases of high-cost cancer, premature babies or larger families, for example. Employers with locations in high-cost areas or in specific industries, such as manufacturing or law enforcement, are also unequally targeted by the 40% tax. Every year an increasing number of moderate health plans will be subject to the tax because it is indexed to the consumer price index, which is lower than health care inflation. In fact, 82% of employers believe their plans will be affected by the tax within the first five years of implementation.

It is urgent that Congress repeal the 40% tax as employers are already taking steps to avoid it by cutting benefits and changing plan designs. A recent study found employers are increasing deductibles and implementing other cost-sharing programs right now, in 2015, to avoid being on a trajectory to trigger the tax when it goes into effect in 2018.

Supporters of the tax argue it is necessary to drive down health care costs -- but the reality is the tax does nothing to make health care more affordable. It is not decreasing the cost of hip or knee replacements or prescription drugs. It is merely forcing employers to shift costs to employees in the form of higher deductibles and copays. 

Thankfully, a majority of members of Congress agree the tax should be eliminated and have cosponsored bills to repeal the tax. This bipartisan group recognizes the harmful impact the tax is already having and will continue to have on their constituents. Congress can't wait -- the time to repeal the tax is now.