WH touting taxing "Cadillac plans" in HCR as "#1 cost saver". They say it was Kerry's idea.

[beachmom]

Nice to see recognition:

http://blogs.abcnews.com/politicalpunch/2009/10/obama-economic-advisor-touts-cadillac-tax-as-no-1-cost-saver.html#

President Obama's chief economic forecaster went to bat on Monday for a tax on high-priced insurance plans, the so-called "Cadillac tax," calling it "probably the number one item that health economists across the ideological spectrum believe is likely to stem the explosion of health-care costs."

"The Senate Finance Committee bill includes a tax on high-priced insurance plans, suggested by Senator Kerry. A policy along these lines, designed carefully, will encourage both employers and employees to be more watchful health care consumers," said Christina Romer, the chair of the Council of Economic Advisors, in a noontime speech to the liberal Center for American Progress in Washington, D.C.

"It will discourage insurance companies from offering high-priced plans that would otherwise eat up larger and larger shares of workers' wages," she continued. "A policy such as this is probably the number one item that health economists across the ideological spectrum believe is likely to stem the explosion of health care costs."

Romer's full-throated endorsement of the "Cadillac tax" keeps the Obama administration at odds on this issue with some of its closest allies.

Organized labor ...

More at the link.

[MBS]

1. the only thing that makes me nervous is the definition of "Cadillac"

Is anything other than bare-bones coverage (like my good insurance plan) "Cadillac"? Or do they only mean over-the-top plans (ones which I've never seen, that's for sure) that might offer truly unusual benefits, like (what? I can't even think what that would be)

[beachmom]

2. I think it is a dollar amount. Meaning above x amount is considered "Cadillac"

And, importantly, the tax is only on the amount above that amount. So you would only be taxed on the portion above the threshold. Frankly, I think it is fair. A lot of people have plans that don't pay for much; if you are lucky enough to have one with great benefits and high premiums (largely paid by the company), I think those folks should pay more. The unions complain, but a lot of them have much better health benefits than the rest of us. True, they took salary cuts in favor of a better health plan, but they benefited from this for many years whereas many non-unionized white collar people had LOWER health benefits, even working for the same company.

Admittedly, when picking a new health plan recently, part of my reasoning for taking a lower premium/lower benefit option was my knowledge that this Cadillac tax might come down the pike. A lot of people may make the same calculation. Of course, that means more out of pocket expenses.

[karynnj]

3. It seems to concern your Senator as well, he brought up the threshold

many times. He had proposed $25,000 adn he had union buyoff. Baucus put it at $21,000 and that has led to organized opposition. I am pretty sure it is on the marginal amount above the threshold only.

This should be explained as capping the tax deduction that people have always had on employer paid plans.

[ProSense]

4. This is interesting:

AFL-CIO head flexible on taxing high-value plans:

WASHINGTON – The head of the AFL-CIO said Monday he's willing to consider a tax on high-end health insurance plans to help pay for President Barack Obama's health care overhaul, as long as middle-class workers aren't hurt.

The comments by AFL-CIO President Richard Trumka indicated new flexibility on the issue from a powerful Democratic constituency as House and Senate leaders scramble to finalize sweeping health care legislation. Trumka last month dismissed the proposed insurance plan tax as "outrageous."

The tax is the Senate's preferred method to pay for covering the uninsured, but labor leaders have worried their workers would be affected even though lawmakers were aiming the proposed tax at insurance plans offering the richest benefits — what Obama has called "Cadillac" plans.

"If you show me a definition of a Cadillac plan that hits the Cadillac plans and not the middle class, then we'd take a look at that, of course," Trumka told reporters on a conference call. "If you wanted to tax the Goldman Sachs plans, I think that's fine," he said.

<...>

[beachmom]

5. Excellent. They are moving in Obama's direction. And I think Kerry

and a few others in the Senate might raise the threshold a tad in the final bill (or rather, Reid hopefully will, so it doesn't have to be fought on).