Nearly half of employers will be subject to the tax when implemented in 2018
| The 40% excise tax on high-cost health plans or “Cadillac Tax” – intended to reduce wasteful spending and better engage consumers in their medical care decisions – has drawn substantial attention by policymakers, healthcare stakeholders, and the media. A recent National Business Group on Health Report suggests that nearly half of employers will be subject to the tax when implemented in 2018. Likely strategies to reduce plan costs to below the maximum spending caps ($10,200 individual coverage; $27,500 family) include reduction of benefits and/or shifting costs to consumers.Concerns raised by the predicted shift from overly generous plans to those with increased consumer cost-sharing (consumer’s share does not contribute to plan cost) are rising rates of cost-related non-adherence of essential medical services that have been demonstrated to lead to adverse health outcomes, worsening disparities, and higher overall expenditures in certain clinical situations. A recently formed coalition of labor, business leaders, and health plans has called for a repeal of the tax, while others – including the NYTimes Editorial Board – have acknowledged the statute’s limitations and have called for adjustments to mitigate likely adverse outcomes.
Value-Based Insurance Design – an innovative approach to health benefits that bases coverage levels on the health-producing potential of clinical services – is one possible solution to the “Cadillac plan” problem for payers. As explained in our newinfographic, V-BID plans maintain “Cadillac” coverage for evidence-based services, while discouraging access to those clinical services of unproven value, producing plan costs that are not subject to the tax. |
| DOWNLOAD INFOGRAPHIC |
| ____________________________________ |
| The University of Michigan Center for Value-Based Insurance Design (V-BID) leads in research, development and advocacy for innovative health benefit designs.For more information about V-BID, please visit our website, follow us onTwitter,and sign up to receive our newsletter. |
