Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

Are Cadillac plans responsible for rising health costs?

Chris Rangel, MD
Policy
July 23, 2013
102 Shares
Share
Tweet
Share

If there’s anything that liberals hate it’s inequality – unless it’s the Federal tax code – and health care is a prime offender. The liberal mantra is that everyone should have the same access to basic health care. But this doesn’t just involve improving health care access and affordability for millions of uninsured Americans. It also involves limiting or impairing (through taxes) those health care plans liberals have decided are too generous. These so called “Cadillac” health care plans that are very expensive, very inclusive, and have relatively low deductibles are usually offered by employers as part of a generous benefits package to attract talent to their companies.

So not only do Cadillac health care plans violate the the liberal directive of health care egalitarianism, they are a tax loophole for highly educated and highly trained employees. In order to fix this affront to the socialist gods the Affordable Care Act (ACA or ObamaCare) handicapped these plans with a 40% tax starting in 2018 for health plans costing more than $10,200 a year for single coverage and $27,500 for a family.

Ostensibly, the tax on Cadillac health care plans was done to try and pay for part of the massive spending bill that was the ACA but Congressional Budget Office estimates of the yearly revenue from this tax have fallen from $24 billion to only $12 billion starting in 2018. And this revenue is likely to continue to decrease as the tax has the intended purpose of eliminating as many of these plans as possible. Additionally, labor unions, a major purchaser of these plans for their members – and a major backer of the Democratic Party – are excluded from this tax which just proves the old saying about socialism, “all people are equal but some are more equal than others.”

But perhaps the wackiest reason that liberals oppose Cadillac health care plans is that they are convinced – a priori – that these plans are a significant reason why health care is so expensive in this country.

The [lack of a current tax on high cost, low deductible employer sponsored health care plans ] creates a bias toward people over-consuming health care services and under-consuming everything else that money might buy. This bias especially advantages people with high incomes, for whom tax subsidies are very large due to their relatively high marginal income tax rates.

Of course there is no proof for this assumption. It’s like claiming that gas prices are high because of rich people driving Hummers. It’s even worse than that.  People don’t consume health care like other consumer products. It’s not like people who have Cadillac health plans – most of whom are relatively young, affluent, and healthy – are having more joint replacements, cardiac procedures, screening colonoscopies, MRI scans, or pregnancies than similar people who have far less expensive plans.

Health care resources are utilized the most by those who need it the most and not by those who can afford it the most. As an example of this we can use data from ER visits as a measure of health care usage by insurance type. It turns out that the vast majority of patients who visit an ER have government insurance coverage and Medicaid beneficiaries under the age of 65 utilize the ER far more than those under 65 who have private insurance such as a Cadillac health care plan. The irony is that the total spent on the much lower cost government insurance of Medicare and Medicaid was actually $65 billion more than the total spent on private insurance (for year 2011) of which only a percentage was from Cadillac health care plans.

One of the biggest attractions of a Cadillac health plan is the low deductibles that liberals claim are “encouraging” over-utilization of health care. These deductibles can be as low as a few hundred dollars and $20 per office visit. Instead, a lower cost private insurance plan can have deductibles of several thousand dollars per year. But wait a minute. The deductibles for Medicaid tend to be only $200 to $300 hundred dollars a month for a small family and Medicaid beneficiaries utilize far more health care resources than the average person under 65 with private insurance. What the heck is going on?

What appears to be going on is that the ACA was designed to give the shaft to people with private insurance plans by forcing their employers to pass more and more of the cost of health care on to their employees in the form of higher deductibles under the farcical liberal notion that excessive medical spending by the privately insured middle and upper middle class is driving up health care costs for Medicaid and Medicare beneficiaries. Unfortunately, this is socialist thinking. Blame those with money for causing the unfortunate circumstances of those without money. Good luck with that logic.

Chris Rangel is an internal medicine physician who blogs at RangelMD.com.

Prev

Behind the scenes of a total colectomy

July 23, 2013 Kevin 1
…
Next

5 reasons why music would be great for digital health

July 24, 2013 Kevin 5
…

Tagged as: Medicare, Public Health & Policy

Post navigation

< Previous Post
Behind the scenes of a total colectomy
Next Post >
5 reasons why music would be great for digital health

More by Chris Rangel, MD

  • Should drug testing be considered screening tests?

    Chris Rangel, MD
  • a desk with keyboard and ipad with the kevinmd logo

    Are hospitals really soaking the poor with high prices?

    Chris Rangel, MD
  • How doctors will use Google Glass

    Chris Rangel, MD

More in Policy

  • Why the WHO’s pandemic accord is critical for global health care

    Elizabeth Métraux
  • The revolutionary Kaiser-Geisinger deal: How health care giants are reshaping the industry and empowering patients

    Robert Pearl, MD
  • Unveiling the intricate link between housing costs and health care

    Harvey Castro, MD, MBA
  • Uncovering the truth about racial health inequities in America: a book review

    John Paul Mikhaiel, MD
  • Why affirmative action is crucial for health equity and social justice in medicine

    Katrina Gipson, MD, MPH
  • The untold story of Hispanic/Latino health: Why subgroup data matters

    Matthew B. Alonso
  • Most Popular

  • Past Week

    • Physician entrepreneurs offer hope for burned out doctors

      Cindy Rubin, MD | Physician
    • Why doctors aren’t to blame for the U.S. opioid crisis [PODCAST]

      The Podcast by KevinMD | Podcast
    • The power of coaching for physicians: transforming thoughts, changing lives

      Kim Downey, PT | Conditions
    • The hidden factor in physician burnout: How the climate crisis is contributing to the erosion of well-being

      Elizabeth Cerceo, MD | Physician
    • Unlocking the secrets of cancer conferences: an end-of-life counselor’s journey among pharmaceutical giants

      Althea Halchuck, EJD | Conditions
    • We need a new Hippocratic Oath that puts patient autonomy first

      Jeffrey A. Singer, MD | Physician
  • Past 6 Months

    • “Is your surgeon really skilled? The hidden threat to public safety in medicine.

      Gene Uzawa Dorio, MD | Physician
    • It’s time to replace the 0 to 10 pain intensity scale with a better measure

      Mark Sullivan, MD and Jane Ballantyne, MD | Conditions
    • Breaking point: the 5 reasons American doctors are dreaming of walking away from medicine

      Amol Shrikhande, MD | Physician
    • Revolutionize your practice: the value-based care model that reduces physician burnout

      Chandravadan Patel, MD | Physician
    • Breaking the cycle of racism in health care: a call for anti-racist action

      Tomi Mitchell, MD | Policy
    • Unveiling the hidden damage: the secretive world of medical boards

      Alan Lindemann, MD | Physician
  • Recent Posts

    • Healing trauma and reconnecting: Unmasking the impact of dissociation [PODCAST]

      The Podcast by KevinMD | Podcast
    • Why the WHO’s pandemic accord is critical for global health care

      Elizabeth Métraux | Policy
    • The revolutionary Kaiser-Geisinger deal: How health care giants are reshaping the industry and empowering patients

      Robert Pearl, MD | Policy
    • The escalating violence in health care workplaces: a critical problem facing the nation’s health care system

      Harry Severance, MD | Physician
    • Is chaos in health care leading us towards socialized medicine? How physician burnout is a catalyst.

      Howard Smith, MD | Physician
    • A pediatrician’s journey into integrative medicine [PODCAST]

      The Podcast by KevinMD | Podcast

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

View 18 Comments >

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

CME Spotlights

From MedPage Today

Latest News

  • Could Semaglutide Help Curb Addictive Behaviors?
  • 'If the Narcan Isn't Working, Give More' and Other Myths About Naloxone Use
  • CDC: Children's Brain Infections Rose Last Winter, But Remained Rare
  • Inside the Fight Against Burnout Amid the Chaos of War in Ukraine
  • Cardiovascular Risk Models Still Fall Short for Arthritis Patients

Meeting Coverage

  • Cardiovascular Risk Models Still Fall Short for Arthritis Patients
  • De-Escalated Surgery Suffices for Low-Risk Cervical Cancer
  • More Evidence Backs Gout Benefit for Gliflozin Agents
  • Reaction to FDA's Approval of Upadacitinib for Crohn's Disease
  • CDK4/6 Extends Reach Into Early-Stage Breast Cancer
  • Most Popular

  • Past Week

    • Physician entrepreneurs offer hope for burned out doctors

      Cindy Rubin, MD | Physician
    • Why doctors aren’t to blame for the U.S. opioid crisis [PODCAST]

      The Podcast by KevinMD | Podcast
    • The power of coaching for physicians: transforming thoughts, changing lives

      Kim Downey, PT | Conditions
    • The hidden factor in physician burnout: How the climate crisis is contributing to the erosion of well-being

      Elizabeth Cerceo, MD | Physician
    • Unlocking the secrets of cancer conferences: an end-of-life counselor’s journey among pharmaceutical giants

      Althea Halchuck, EJD | Conditions
    • We need a new Hippocratic Oath that puts patient autonomy first

      Jeffrey A. Singer, MD | Physician
  • Past 6 Months

    • “Is your surgeon really skilled? The hidden threat to public safety in medicine.

      Gene Uzawa Dorio, MD | Physician
    • It’s time to replace the 0 to 10 pain intensity scale with a better measure

      Mark Sullivan, MD and Jane Ballantyne, MD | Conditions
    • Breaking point: the 5 reasons American doctors are dreaming of walking away from medicine

      Amol Shrikhande, MD | Physician
    • Revolutionize your practice: the value-based care model that reduces physician burnout

      Chandravadan Patel, MD | Physician
    • Breaking the cycle of racism in health care: a call for anti-racist action

      Tomi Mitchell, MD | Policy
    • Unveiling the hidden damage: the secretive world of medical boards

      Alan Lindemann, MD | Physician
  • Recent Posts

    • Healing trauma and reconnecting: Unmasking the impact of dissociation [PODCAST]

      The Podcast by KevinMD | Podcast
    • Why the WHO’s pandemic accord is critical for global health care

      Elizabeth Métraux | Policy
    • The revolutionary Kaiser-Geisinger deal: How health care giants are reshaping the industry and empowering patients

      Robert Pearl, MD | Policy
    • The escalating violence in health care workplaces: a critical problem facing the nation’s health care system

      Harry Severance, MD | Physician
    • Is chaos in health care leading us towards socialized medicine? How physician burnout is a catalyst.

      Howard Smith, MD | Physician
    • A pediatrician’s journey into integrative medicine [PODCAST]

      The Podcast by KevinMD | Podcast

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

Are Cadillac plans responsible for rising health costs?
18 comments

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...