Cadillac Tax

Cadillac TaxIt sounds like a tax on the new shiny car you just purchased, but when you are talking about healthcare it’s something entirely different. Cadillac Tax coined term for the excise tax of 40% of the value of employer sponsored health insurance plans that exceeds $10,200 for individuals and $27,500 for families, and takes effect in 2018. There are many parts of the Affordable Care Act (ACA) that need to be revised and this is one of the major ones that’s on the Democratic candidates agendas. The majority of Republican candidates aren’t even looking at the Cadillac tax because they want to revise the ACA so drastically that there will be very little semblance if any to the ACA that we see today.

According to a Forbes article, “rather than paying the tax, employers are likely to respond in two ways, some will offer their workers less generous plans with higher deductibles and co-pays or with more tightly controlled managed care, or they will use their market clout to push down prices from medical providers to keep their health plans below the taxable threshold.” Highly unlikely that any kind of clout can bully a large insurance conglomerate into bending their plan prices, but for the sake of argument lets go with it. The problem with changing this Cadillac tax is that it is one of the main revenue sources for the ACA, claiming to help curb healthcare costs. Moreover this tax creates the equality in healthcare that the ACA is trying to create and if you want more than your average plan you will be paying the extra taxes to have it.

This tax is estimated to bring $80 billion in revenue between 2018 and 2023, so without it where will this money come from? Insurance is now an absolute, a requirement for every U.S. citizen, and if you want the very best you’re going to be penalized for it. At this point it does not seem that either political party, Republican or Democrat has the right answer. Where is the healthy balance or is there one?



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