The Scoop On “Cadillac” Health Plans

Members of the Senate Finance Committee are not considering new measures that are meant to target those insurers who offer top-tier plans in an effort to find sufficient revenue to offset the costs of proposed health care reforms.

Dubbed the “Cadillac” health care plans, these new policies will come at higher costs while also giving the insured party enough flexibility to see any physician they choose and forego co-pays in many cases. The Finance Committee, among others in Congress charged with the mammoth task of health care reform, are thinking about taxing certain companies.

Senator John Kerry, who is also on the Finance Committee and a major supporter, left the negotiations on Wednesday. The reason cited by Kerry was that the reform proposal was being pieced together and he admitted that any new taxes would be dependent on how much additional revenue senators would need to come up with so the bill doesn’t add to the deficit.

Obviously, all of this highlights the fact that the biggest problem with reforming the health care system is one of cost. Both Republicans and conservative Democrats have opposed the plan because they believe it simply costs too much money.

Of course, it is not at all clear how much revenue could be generated by taxing the top-tier plans. There are experts that suggest that less than one-half of one percent of all U.S. citizens with employer-provided health plans with premiums of $25,000 or more. There may not be very many at all, who have the so-called “Cadillac” plans. If so, then this may not be a viable revenue resource.

Even though Union insurance plans are often considered to have Cadillac benefits, but they still average well below $25,000 annually and wouldn’t be affected. Still, many of the top union organizers oppose the plan. It is believed by most that taxing insurers will lead to additional costs to employees.