Category: New Health Care Law

More than 40% of Employers will be Exosed to the Cadillac Tax in Coming Years

A controversial part of Obamacare imposes an excise tax on high cost health plans. Beginning in 2018, the so-called Cadillac Tax will impose a penalty of 40 percent of all costs in excess of $10,200 for employee-only coverage and $27,500 for family coverage. The threshold increases annually with inflation; that is regular inflation, not medical care inflation which rises at more than double the rate of general inflation.

Employers have a few options to avoid the tax. But all are things workers dislike, such as increasing cost-sharing, eliminating covered services, eliminating tax-free dollars for HSAs, HRAs and FSAs and adopting narrow networks.

The Kaiser Family Foundation looked at the proportion of firms offering health benefits plans that are expected to reach the threshold.

 

 

kaiser1

If you only look at large firms employing 200 workers or more, nearly half (46%) will have health plans subject to the tax in 2018. More than two-thirds (68%) will have health plans subject to the tax by 2028.

The tax exclusion for employee health insurance is worth approximately 40% to 45% (25% marginal tax rate, 15.3% payroll tax and maybe 5% state and local tax). What the Cadillac Tax does is impose a 40% tax on the excess costs over the threshold. What that basically means is the open-ended tax exclusion for employer sponsored health plans has been limited to $10,200 per individual and $27,500 per family.

Pro: Limiting the tax exclusion may encourage health plans to look for ways to reduce medical spending.

Con: Over time more and more people will be subject to the tax.

Should the Cadillac Tax be repealed?   Let me know what you think!

Electronic Health Records Harms the Doctor-Patient Relationship

By Lawrence N. Pivnick MD JD

A Texas Medical Liability Trust poll found that most of the patients interviewed said they wanted a physician who made them comfortable, to whom they could talk, one who actually listened to them. And they valued those attributes in their physician even more highly than his clinical acumen.

Commonwealth Fund’s Red Herring on Obamacare Risk Selection

One of this blog’s consistent themes is that Obamacare encourages insurers to seek to enroll health people in exchanges, and shun sick people. A new study from the Commonwealth Fund insists that is not the case, concluding that “insurers aren’t seeking lower-risk customers outside the ACA exchanges as some feared,” and “the ACA’s insurance reforms are working in the individual market.”

I will share the study’s conclusion, then explain the red-herring hypothesis it is meant to test:

Gallup Confirms Obamacare Increased Welfare Dependency

I did not bother to discuss Gallup’s July update on the drop in uninsured Americans, because it was substantively the same as the teaser released in March, which showed most of the increase in health insurance was actually Medicaid, which is welfare dependency.

Gallup has just released a state-by-state report, concluding Medicaid expansion and establishing a state exchange almost doubled the reduction in uninsured. Of the two, I cannot imagine setting up a state exchange is a big factor, because beneficiaries get the same tax credits in state or federal Obamacare exchanges. Obamacare mostly increased Medicaid dependency.

Obamacare Exchanges: Trusted, Verified, Disliked

Remember Ronald Reagan’s principle for negotiating arms deals with the Soviet Union? “Trust, but verify.”

Well, Obamacare customers have trusted and verified the insurance policies they can buy on Obamacare’s exchanges, but they don’t like what they get. This according to a survey conducted by the Deloitte Center for Health Solutions:

Deloitte

New Evidence That Obamacare Is Working?

Obamacare supporters are excited by a research article suggesting Obamacare is working to increase access to care. In an article published in JAMA: The Journal of the American Medical Association, researchers followed up respondents to the Gallup-Healthways Well-Being Index (which I’ve discussed previously.)

Yes, in an absolute sense, their access to care improved. According to the Huffington Post’s Jonathan Cohn, this means “Another Argument From Obamacare Critics Is Starting To Crumble.”

Oh dear. Even Citizen Cohn admits “The picture from the raw data is a little muddled” and “like all academic studies, this one will be subject to scrutiny that, over time, could call its findings into question.” Well, I won’t call them into question, just point out what is obvious from the abstract itself: Obamacare is dong a terrible job increasing access to care.

GAO: Small Medical Device Manufactures Not Thriving under Obamacare

The Affordable Care Act imposes a 2.3 percent excise tax on gross sales on the manufacture and importation of medical devices. Devices typically sold by retailers to consumers — including toothbrushes and bandages — are exempt from the tax, whereas devices purchased from wholesalers by health care providers, such as tongue depressors and ultrasound equipment, are taxable. There is broad bipartisan support in Congress for repealing the medical device tax, due to the negative effect an excise tax has on manufacturers.

Will 11 Million Pay Obamacare’s Individual Mandate Penalty?

I recently took issue with lack of clarity in media coverage of a report by the IRS’ Taxpayer Advocate, which claimed 6.6 million paid Obamacare’s individual mandate penalty last year. I figured the total must be significantly higher, because each tax return would cover more than one individual.

In an e-mail to me dated July 21, 2015, Doug Badger, a longtime veteran of Republican administrations and whose Doug’s Briefcase blog is a must-read, pointed out that there can be more than one person in a household applying for Obamacare coverage:

….. a more accurate measure of household size could be obtained by dividing the number of people included in a completed applications by the number of applications.  That yields a factor of around 1.35, as opposed to 2.35.  I admit that is a rough approximation and there may be better ways of calculating the number of people affected by the tax on the uninsured.  In any event, your central point is exactly right: the number of people living in households that paid the tax is much greater than 6.6 million.

Obamacare Exchange Plans Have 34 Percent Fewer Providers than Commercial Plans

Avalere Health has quantified how narrow networks are in Obamacare exchange plans, as shown in the figure below:

Avalere

According to Avalere CEO President Dan Mendelson: “Plans continue to test new benefit designs in the exchange market. Given the new requirements put in place by the ACA, network design is one way plans can drive value-based care and keep premiums low.” Well, that is one way to look at it and I hope Mr. Mendelson is right.

Did 15 Million – Not 6.6 Million – Pay Obamacare’s Mandate Penalty?

The media have reported that 6.6 million “taxpayers” paid the Obamacare penalty (tax) for not obeying the individual mandate to buy federally qualified health insurance in 2014. However, the actual figure must be much larger.

However, the report by the Taxpayer Advocate discusses “returns,” not individual taxpayers. It reports that 2.6 million 2014 returns claimed Obamacare’s premium tax credits, totaling $7.7 billion paid out, and an average pay out of $3,000).

We know from other sources that about 6.14 million individuals claimed tax credits for Obamacare coverage last year (87 percent of 7.06 million individuals). (And that is only if we count people who signed up during open enrollment, which ended in March 2014. Because special enrollment continued throughout the year, most of those who signed up later would also have claimed tax credits.)