The Public Policy

Pink Cadillac

Welcome "Cadillac health plans" to the rhetoric of healthcare reform. It's not the last time you'll be hearing it.

By 8.20.09

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Now that Uncle Sam is in the automotive business, some members of Congress are beginning to behave like used car salesmen (my apologies to used car salesmen). Specifically, some of our elected representatives are trying to sell the American public on healthcare reform via the old bait-and-switch.

The issue at hand is taxing employer-provided health benefits -- another third rail in the battle for healthcare reform.

Sixty percent of the American public receives health benefits through their jobs -- and they're not "free." According to the Kaiser Family Foundation, the average American worker with employer-provided healthcare pays about 41% of the cost.

Two of the players in Congress, Senators Baucus and Wyden, want to tax employer-provided health benefits when they're "above a certain value."

Question: is that "certain value" before or after the 41% cost-share?

For those with selective memory issues, during the most recent presidential election, candidate Obama called candidate McCain's proposal to tax employer-provided health benefits "the largest middle-class tax increase in history."

Here's what Josh Karden, Mr. Wyden's chief-of-staff, has to say on the matter:

"Cadillac health plans should be treated as income, regardless of who is receiving them." Mr. Karden specifically mentions "wealthy chief executives."

Welcome "Cadillac health plans" to the rhetoric of healthcare reform. It's not the last time you'll be hearing it.

How do you define a "Cadillac" health plan? Didn't candidate Obama say that he wants every American to have "the same healthcare as members of Congress?" (Hint -- yes, he did.) Are the "employer-provided" health benefits that federal employees have "Cadillac?" (Hint -- yes, they are, so long as you define "Cadillac" as having extensive prescription drug coverage and ample patient choice.)

Does this mean Uncle Sam will tax the healthcare benefits of members of Congress, federal government employees, teachers, fire fighters, police officers, as well as "wealthy chief executives"?

Consider a new website set up by American Federation of State, County and Municipal Employees and the AFL-CIO -- StopWydensHealthtax.com.

Is that a coalition I hear breaking apart?

Also, does this mean the touted "public plan" that's getting so much attention won't be of the "Cadillac" variety?

Perhaps it will be more like a Yugo or a Zhiguli.

This is healthcare reform?

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About the Author

Peter Pitts is partner/director of global health at Porter Novelli, a senior fellow at the Center for Medicine in the Public Interest, and a former FDA associate commissioner.