New York Times Gets So-Called “Cadillac Tax” Wrong
By Benjamin Day, Healthcare-NOW! Director of Organizing –
Yesterday, the New York Times reported that the Affordable Care Act’s “Cadillac Tax” will accelerate the erosion of quality health insurance as employers demand higher copays and deductibles from their workers to keep their premiums low enough to avoid the tax.
While the Times is correct about the dangers of the tax, they are perpetuating inaccuracies about who will face the tax and how employers are trying to avoid it.
The Times inaccurately states that the tax “penalizes companies that offer high-end healthcare plans to their employees.” The tax, starting in 2018, actually penalizes plans with premium costs above $10,200 for individuals or $27,500 for families.
However, your premium costs have almost nothing to do with how good your coverage is, or whether you have a “high-end” plan or not. A 2009 Health Affairs study found that the quality of insurance coverage explains only 3.7% of the variation in premiums.
This means the tax will not be hitting those with good health coverage, but rather older patients (who can be charged up to three times what younger patients are for the same coverage), and those living in states with expensive hospital care. The term “Cadillac Tax” itself is inaccurate and misleading, and the Times should not be perpetuating this myth.
A major theme of the Times’s article is that employers will try to keep their premiums down by keeping their employees healthy, through “wellness” programs that create financial incentives for healthy behavior (such as smoking cessation, weight loss, etc). A number of recent studies show that these programs are not effective at reducing healthcare costs, and in reality they are a way for employers to shift costs onto workers with chronic illnesses or disabilities by charging them higher premiums or withholding benefits.
Join me in writing a letter to the editor of the New York Times asking them to stop perpetuating the myths of the “Cadillac Tax” and “wellness programs,” and reminding them that a single-payer health plan would take the burden of healthcare costs off of employers and give all workers access to comprehensive coverage – with no cost sharing – while reducing our healthcare costs. Painful tradeoffs like those that will be created by the Affordable Care Act’s tax on high-premium plans are unnecessary and immoral with a proven alternative like single payer reform.
You can submit a letter to the Times by emailing letters@nytimes.com. Letters can be no longer than 150 words, must refer to an article that has appeared within the last seven days, and must include your address and phone numbers. No attachments.
For inspiration, here’s what I submitted to the Times:
Dear Editor:
In its May 27 article (“High-End Health Plans Scale Back to Avoid ‘Cadillac Tax’”), the Times perpetuates the myth that the Affordable Care Act, starting in 2018, will tax “high-end health care plans.” In reality it will tax plans with high premiums, which are not those with the best coverage but rather those offered to older people (who can be charged three times the premium of younger patients for the same coverage) and those living in high-cost states. A 2009 Health Affairs study found that only 3.7% of differences among premiums could be explained by how good their coverage was. The term “cadillac tax” is misleading and should be abandoned by the Times. The tragic consequences outlined by the Times – rising deductibles and copays – are all too real, though, and unnecessary given that single payer health reform could extend comprehensive care to all residents while reducing our spending.
For a better chance of being published, please don’t copy this letter word for word.
Dear Editor:
In its May 27 article (“High-End Health Plans Scale Back to Avoid ‘Cadillac Tax’”), the Times perpetuates the myth that the Affordable Care Act, starting in 2018, will tax “high-end health care plans.” In reality it will tax plans with high premiums, which are not those with the best coverage but rather those offered to older people (who can be charged three times the premium of younger patients for the same coverage) and those living in high-cost states. A 2009 Health Affairs study found that only 3.7% of differences among premiums could be explained by how good their coverage was. The term “cadillac tax” is misleading and should be abandoned by the Times. The tragic consequences outlined by the Times – rising deductibles and copays – are all too real, though, and unnecessary given that single payer health reform could extend comprehensive care to all residents while reducing our spending.
What in the world is a “High End Health Plan” aka a “Cadillac Plan”? Is it one that gives you care that you don’t need? If that’s what it is, give me a “High Efficiency Toyota Plan” instead. I don’t want any part of the estimated 25-30% of diagnostics and procedures that are unnecessary and just enrich certain providers. Neither do I want a plan that spends a lot of my premium on administrative costs and profits for the insurance company. The Times tries to make the case that taxing “Cadillac Plans” will somehow save money, but it certainly won’t save money for anyone who is sick. Our U.S. healthcare is already suffering from draconian cost-shifting onto patients, especially those who are older and sicker. Meanwhile, the concept of “skin in the game” to try to control spending has the perverse effect of discouraging regular care for chronic diseases such as asthma and diabetes, both of which are much cheaper to control with an ongoing approach instead of waiting for the crises that are expensive. Health care is not a commodity whose price responds to classic market forces. Health care is a human right.
Great letter, Dr. Schumann! Thanks for sending this in.
What is a “Cadillac Plan?” Is it one that encourages the 25-30% of unnecessary or harmful treatments that line the pockets of greedy hospitals and providers? What is a “High End Plan”? Is it insurance that wastes 30% of our health care dollars on administration to deny claims and profit to investors? I don’t want a plan like that; I prefer an efficient “Toyota Plan” that is always ready to go when I need it and doesn’t cost an arm and a leg. The New York Times article implies that health care spending is a commodity, but in fact health care is a human right. Putting more and more of the cost burden on sick patients doesn’t meet the needs of the people or the country. Someone with diabetes or asthma needs early, ongoing care for free so that he or she can avoid expensive treatments later. Raising deductibles, copays and premiums don’t address the issue of high quality access to economical, life-saving primary care.
“Cadillac Tax” refers to the costs shouldered by those privileged few who constantly blubber about their “lost” billions of dollars they have to pay for their unearned income while enjoying a life of leisure even as others perform the actual, physical labor that produces all those billions in the first place.
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