Open discussion of caddy tax v tax exclusion, October 2009 version

I was looking back through the columns (29 of them) that I wrote for the Raleigh (N.C.) News and Observer on health reform in 2009 & 2010 to see how I had discussed the cadillac tax versus a more straightforward capping of the tax exclusion of employer sponsored insurance. The presence of this tax (caddy tax) in the ACA has been given as evidence of a non transparent debate about the ACA. This is simply untrue.

On October 23, 2009, I wrote a column that focuses on the presence of what came to be called the Cadillac tax in the Senate bill and said this about the tax on high cost policies:

The tax on high-cost insurance policies is a de facto capping of the amount of tax-free income that may be received via employer-paid health insurance. I would prefer a more straightforward capping of the tax exclusion of employer-paid premiums because it would initiate a cultural conversation about health-care costs that more directly focused on the end user of care: patients. The high-cost tax has found favor because it would be politically easier to sell a tax on insurance companies than it would be to end a popular tax loophole that benefits those with good workplace health insurance. But they both work in more or less the same way.

This is not some soul-heavy confession about the Cadillac tax being a secret, opaque means of capping the now-unlimited tax exclusion of employer sponsored insurance, and being placed in a bill in the middle of the night so it could not be debate. it was written in a newspaper two months before the Senate passed their bill.

update: fixed some typos, and revised for clarity

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

2 Responses to Open discussion of caddy tax v tax exclusion, October 2009 version

  1. Bob Hertz says:

    Let me wade into this again.
    There is no question that those persons who receive tax free employer health insurance are better off than those who do not — the part timers, the unemployed, the workers in historically stingy industries like food service and retail.

    OK now what?

    Seems to me that we should make make any kind of employer contribution into taxable income, though not all at once. (that would be a shock to the economy.)

    Maybe if one’s salary was over $50,000, then one third of employer health insurance payments would be taxable, something like that.

    But that is perhaps too honest for the current Congress. Republicans have the stupid Norquist pledge to deal with, and Democrats would be uncomfortable because many federal employees and other ‘blue’ occupations like senior teachers would be impacted.

    Too bad, I say.But stop with the emphasis on taxing plan provisions. Most other wealthy nations are proud to offer Cadillac benefits, instead they just control prices.

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