Critical Condition

NRO’s health-care blog.

On Cadillac Health Plans; and the Taxation Thereof


Count me in as one who anticipates that a January “conference” (of whatever formality) mashing up the House and Senate health bills will be a lot tougher than the Beltway pros believe. A growing number of people, whom the president should take for granted, have been finding things in the bills that displease them greatly.

And I don’t just mean the HuffingtonPost/DailyKos/ crowd. There’s even a sense at the New York Times that the president’s faction has failed to grab history by the tail. Witness this column by Bob Herbert, who protests the tax on so-called “Cadillac health plans,” those which cost more than $23,000 for family coverage or $8,500 for single coverage. Because these dollar amounts will not adjust with inflation, Mr. Herbert notes that an increasing number of people will be subject to the tax as the years roll by.

Of course, Mr. Herbert is carrying water for organized labor, which is a staunch opponent of the “Cadillac tax.” One of Big Labor’s major successes has been to negotiate juicy health benefits, especially for retirees. (This is especially true in the public sector, as described in a new book by Steve Greenhut.)

Conservatives haven’t really weighed in on the “Cadillac” tax. Good: Let the unions fight their own battle. It is a tax hike, which any conservative should oppose. However, if it were re-cast in a different bill, it could be used to fund a universal tax credit or voucher, which would reduce Medicaid and SCHIP dependency. Indeed, lest we forget, this is the path Senator McCain took in his presidential campaign, and which I discussed favorably at the time.

John R. Graham is director of Health Care Studies at the Pacific Research Institute.


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