Large employers cite upcoming Obamacare Cadillac tax for reduced benefits
posted at 9:31 pm on November 25, 2013 by Mary Katharine Ham
See? There’s something in this law for everyone, just not exactly the way they said.
But take heart, America. Brian Williams of the NBC Nightly News is on it, sending investigative reporters to look into the “fine print” of Obamacare. Isn’t that something that would have been more useful four years ago?
Now NBC’s found out that large companies— add ‘em to the small companies and individual market plans—are also reducing benefits, raising co-pays and deductibles to cope with Obamacare’s new costs. So, if you have a catastrophic plan in the individual market, you’re losing the plan you may have liked for the privilege of paying more. If you had a middle-of-the-road individual market plan you liked, you’re losing that plan for the privilege of paying more often for fewer benefits. If you had a decent plan at a small employer, you’re likely to get dumped into the exchanges as mandate-heavy health care plans get too expensive for small businesses to afford. If you have a plan you like at a medium-sized employer, you’re likely to get dumped into the exchanges next year when the employer mandate kicks in, and your costs are already rising or benefits are going down. If you’re at a large employer with a very nice health insurance plan, sorry, you’re now going to have reduced benefits to avoid the “Cadillac” tax.
For 75 million Americans who get their insurance through large companies, the Affordable Care Act is a mixed bag. Experts tell NBC News the new healthcare law is only slightly increasing premiums next year, but causing some companies with the most generous plans to reduce their employees’ benefits.
Aaron Baker, 36, his wife Billie and their two young children are covered under a generous health insurance plan offered by the private Midwestern university where he’s worked for 10 years. When they opened their benefits notice this year, they were pleased to see their $385 premium is only up by four dollars next year. However, they were shocked to discover that instead of covering the first dollar they spend with no deductible, the Baker’s plan now includes a $1,000 deductible and a $2,500 out of pocket maximum. They also will still have small co-pays for services.
According to the enrollment notice, the changes are “to relieve future health plan trend pressure and to put the university in a position to avoid the excise tax that becomes effective in 2018.” The 40 percent excise tax—often called the “Cadillac tax”— is part of Obamacare and is levied on the most generous health plans. It’s designed to bring down overall health costs by making companies and workers more cost-conscious. The thinking is that if consumers have to pay more expenses themselves, through higher deductibles and out-of-pocket expenses, they’ll avoid unnecessary or overly costly procedures. And that is supposed to make care more affordable for everyone.
Billie Baker doesn’t think much of that concept. “I think that saying that your insurance is too good so we’re going to give you a penalty,” she said, “is sort of outrageous to me.”
For the record, the idea that consumers paying more expenses themselves might help overall health costs by encouraging fewer unnecessary procedures is perfectly reasonable. The problem is we’re only encouraging it in people who already pay for their own plans without taxpayer help. When the taxpayer foots the bill, as with Medicare, there’s little to no incentive to reduce spending. And, of course, in Obamacare as pitched, there were no losers. The Bakers were supposed to have what they liked and be able to keep it.
Visit NBCNews.com for breaking news, world news, and news about the economyNote the Obama administration’s defense. This is, once again, a “small percentage” of people and “there’s nothing in the law that tells you you need to raise copays or deductibles.” Those damn insurance companies, following the law and trying to stay in business again.