*This article concerning health costs came from the New York Times. It was written by David Leonhart and it was published on July 19, 2019. Link
My health care is a benefit. Your health care is a cost.
That widespread attitude has long hurt political efforts to hold down medical costs. When people hear that the government (or an insurance company or a hospital) is taking steps to reduce health care spending, they get nervous about being denied medical care.
You can probably see the problem: Someone has to pay for medical care. And to some extent, we all pay for each other’s care, through both taxes and private insurance. Ultimately, an unwillingness to say no to health care spending leads to higher costs for everyone.
That’s one reason that Americans have the world’s highest medical costs. (Another reason is that doctors, drug companies and other parts of the American health care industry make a lot of money.) We struggle to say no even to health care that doesn’t make us healthier. Cardiology, prostate care and obstetrics are three examples, among many, of fields where high-cost care often brings no benefit.
All of which brings me to the sad story of the Cadillac tax.
During the long debate over the Affordable Care Act a decade ago, the Obama administration was one of the only forces for fiscal conservatism — that is, trying to hold down health care spending. Congressional Republicans could have pushed for cost-saving measures, but instead they just opposed any effort to insure the uninsured. Many congressional Democrats, especially in the House, had no interest in policies to hold down spending.
Now that the Obama administration is gone, an important part of the health care law seems likely to die: the Cadillac tax. Had it gone into effect, the tax would have applied to expensive insurance plans — that is, those with relatively few restrictions — as a way of encouraging companies and workers to use more efficient plans. A few years ago, though, Congress delayed it, and on Wednesday the House voted to repeal it. The Senate seems likely to follow. Being in favor of unconstrained health spending is politically easy, even though it’s bad policy.
Labor unions are probably the best example of the perverse politics of medical spending. Unions have always opposed the Cadillac tax, out of fear that it will deny needed medical care to their members. As a result, the unions have ended up effectively pushing for expensive health care plans that quietly pinch their members’ paychecks.
The sharp rise of health spending in recent decades is one reason that wage increases have been so weak. As Paul N. Van de Water, a health care expert at the Center on Budget and Policy Priorities, told Abby Goodnough of The Times, the tax was “one of the A.C.A.’s most important cost-containment measures” and could have led to pay increases.
For more …
“Rather than killing or delaying the Cadillac tax, Democrats should be trying to make it operational. The tax would raise revenue, lower costs, increase the efficiency of the tax code and give the Obamacare individual market its best chance at success,” Karl W. Smith wrote for Bloomberg Opinion. “Instead, Democrats have set up that market for more turmoil.”
The Urban Institute has published a research paper with suggestions for improving the Cadillac tax rather than abolishing it.
For the other side of the argument, see Janet Trautwein, who works at an insurance industry trade group, or Stan Dorn, a consumer advocate. Core to the case against the tax is the idea that wasteful health care is not a meaningful contributor to overall costs.