The Affordable Care Act Assignment | Online Assignment

Prompt The Affordable Care Act included a provision widely referred to as the “Cadillac Tax” which has never yet been implemented and might soon be repealed altogether. Most economists think that this provision was a good idea. Briefly explain why many economists favored it, and whether you think it represents good policy. NOTE: I have included some answers that might help but you can’t use it or right the same.

.The “Cadillac Act” was written into the Affordable Care Act (ACA) to reduce healthcare spending and produce revenue for the program. The excise tax is largely part of the ACA’s strategic plan to contain and reduce overall healthcare costs.  As well as support and drive revenue for the laws nearly $1 trillion in expenses. Economists are supportive of this tax to reduce the average growth of healthcare and encourage employers to negotiate better deals for insurance to reduce the amount of payments for unnecessary care. The tax would encourage corporations, plan administrations and employees to seek lower cost healthcare providers. This tax would drive for innovation and cost sharing ideas to reduce overall payments.

The “Cadillac Tax” to me misses the point entirely of employer supported coverage. Most individuals work for companies that can offer the best insurance plans. I personally have left jobs for better opportunity in benefits specifically healthcare coverage. This tax would reduce and/or eliminate employers from offering their employees such extensive benefits. I personally chose to pay more per pay period to have more extensive benefits in which I rarely use but should I need it, it is there. This would potentially affect the choices my employer offers and the decision I would need to make for my family.  I think this policy is a good place to start when looking at ways to make consumers more accountable for their use of healthcare. I think it is important to continue to offer extensive coverage plans but will come at a cost. We all make a choice on how and where we spend our money. The tax potentially could force consumers to make wiser spending choices but could lead to consumers having to foot more of the bill. Considering what is happening in the world with COVID, my concern is how healthcare and healthcare plans will change in these times of economic stress. Employers will be seeking ways to cut expenses and reduce overhead as economic recovery occurs.

References

Rovner, Julie. “Cadilac Tax” On Generous Health Plans May Be Headed for Repeal. Retirieved on May 11th,2020 from. https://www.npr.org/sections/health-shots/2019/08/14/750859901/cadillac-tax-on-generous-health-plans-may-be-headed-to-congressional-junkyard.

Waddill, Kelsey. Why Payers Should Care about the Cadiliac Tax Repeal. Retrieved on May 11th, 2020 from https://healthpayerintelligence.com/news/why-payers-should-care-about-the-cadillac-tax-repeal.

Van De Water, Paul N. Why Congress Shouldn’t Repeal the Cadiliac Tax. Retrieved on May 11th, 2020 from https://www.cbpp.org/research/health/why-congress-shouldnt-repeal-the-cadillac-tax

2. The idea behind the “Cadillac Tax” was to institute a tax on the “most generous” employer-provided health insurance plans, with a goal of using some of this additional funding to help pay for the costs associated with the Affordable Care Act. Quoted in an NPR article on this topic, Gregory Mankiw stated “if people have insurance that pays for too much, they don’t have enough skin in the game. They may be too quick to seek professional medical care. They may too easily accede when physicians recommend superfluous tests and treatment” (Rovner, 2019).

Based on the statement of Mankiw, it seems as though economists support the Cadillac tax because of the potential moral hazard that exists in the “generous plans,” ultimately leading to the continued increase in overall healthcare costs. While I understand why this tax would be controversial, it seems to make sense from a bigger picture perspective. If the goal of the country, and the Affordable Care Act, is to expand coverage and lower costs of healthcare spending, it makes sense that everyone would need to contribute as part of the solution vs. continually allowing those with the most resources to drive up costs and create over-utilization.

Given the bigger picture thinking, I think the proposed tax makes good policy. I can see the drawbacks and the fear some might have related to changes in their own plans, especially referencing some of the articles we read last week related the problems with copay and the negative financial impacts for those with high deductible plans, but I think that everyone needs to make a change in order to accomplish the larger goals.

References:

Rovner, J. (2019, August 14). ‘Cadillac Tax’ On Generous Health Plans May Be Headed For Repeal. Retrieved from https://www.npr.org/sections/health-shots/2019/08/14/750859901/cadillac-tax-on-generous-health-plans-may-be-headed-to-congressional-junkyard