To help fund the proposed health reform measures, lawmakers are thinking about imposing a stiff tax–up to 35%–on so-called “Cadillac” health insurance plans. Those are defined as individual plans valued at $8,000 per year, or family plans valued at $21,000.
They typically have low deductibles, cover vision, and dental. Such plans are usually just described as “good benefits,” or “I’m really pleased with the health insurance that our company offers.” Such “Cadillac” plans are not just for high-paid executives. They are common in union contracts.
Wouldn’t taxing these good insurance benefits mean that fewer companies would offer them? Wouldn’t this result in people having poorer health care than they currently have? Doesn’t that work against the stated purpose of health care reform? How can taxing excellent plans be justified? Don’t lawmakers understand that the prospect of having worse health care than they did before the reform is what makes people leery about their tampering?
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