Is Baucus’ excise on ‘Cadillac’ plans too broad?

The New York Times‘ Reed Abelson writes that the excise tax on premium health insurance plans that Montana Sen. Max Baucus is counting on to pay for about a quarter of his $774 billion reform proposal will hit urban families and union workers as hard as it will Goldman Sachs executives. Proportionally, in fact, union workers with less disposable income will suffer even more from the tax, which hits any plan that costs more than $8,000 for individuals or $21,000 for families, than high-flying white collar types.

The current national average for family policies is around $13,375, and only 1/10 of them would fall under the tax. But, Abelson reports, the pace of health premium inflation is such that far more policies will be caught in the tax net by the time the excise would go into effect in 2013.

The tax is based on the theory that it will help control health care costs by discouraging insurers from offering fancy plans that cover too many unnecessary tests and procedures. AHCJ immediate past president Trudy Lieberman writes for that even this attempt to rein in costs will likely just increase them further as insurers pass the costs onto customers and the weaker coverage and corresponding rise in underinsurance forces folks faced with catastrophic conditions into financial difficulty or bankruptcy.

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