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Well-Designed Plans Produce Results
I support taxes on "Cadillac" plans as long as we adjust the cost for plans that enroll a higher percentage of less-healthy patients. Research shows that a richer plan does not produce better health or health care.
The "Cadillac" plans typically have bad plan designs that provide 100 percent reimbursement for hospitalizations and outpatient surgeries, and close to 100 percent reimbursement for expensive and overused diagnostic tests. When plan participants are paying little or nothing for the most expensive components of care, they have no incentive to manage their health or the quality of their care. They also are less likely to adhere to chronic disease treatment plans because they implicitly know that their hospitalization is completely covered.
It is inconvenient and challenging for many people to change their behaviors to better manage their health or diseases. There has to be some degree of cost sharing for the most expensive and technologically-intensive treatment to get them to alter their behaviors.
By contrast, those plans that align the plan participants and payers by giving incentives for high-quality care and healthy patient behaviors should be rewarded. In those plans, because there are cost-sharing arrangements and differences in premiums and payments to providers, there are opportunities to affect both doctor and patient behavior for the better.
For example, we should give discounts for patients with chronic diseases like Type 2 diabetes who do everything they are supposed to do to maintain or improve their health, since we know that Type 2 diabetics can actually improve their condition. We should use workplace-based clinics that deliver convenient, lower-cost care, and an exceptionally high degree of employee satisfaction. We should aggressively promote preventive screenings that save on health care costs.
As I saw at Pitney Bowes, an intelligently-designed health plan produces better health and health care at a significantly lower cost than these "Cadillac" plans.
By
Michael Critelli
|
September 22, 2009; 10:21 AM ET
| Category:
Public policy
,
Taxes
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Posted by: boosterprez | September 22, 2009 6:36 PM
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As the President and I are probably the last two smokers left on earth, I'm going to need his help on this one. A tax on "Cadillac" Health Plans is just like the taxes on cigarettes in that it taxes in the direction of diminishing returns. That is not what you want in Health Care, where occasionally a better treatment comes along that is cheaper too.
The "Cadillac" Plans are already "taxed" by virtue of a higher price traded for waste in the Health Care system. To be fair, all plans are "taxed" in this manner, and simple accounting conventions dictate whether the "tax" is levied first or last. "Cadillac" plans buy more procedures so they buy more redundant and wasteful procedures and therefore are "taxed" more.
I'm waiting for an MBA to tell me you don't need an MBA to see that Employers should not be in the Health Care business unless they want to compensate (rent) 24/7 of the Employee's time. Unions too. I live in Texas where we pay for Education with the Lottery, sending kids to school to make them smarter than to play the Lottery and proving that the Baby Boom will never be over.
Tax Policy needs to work, not just on paper and for just under initial conditions, otherwise, it's just taxes.
Posted by: gannon_dick | September 22, 2009 4:08 PM
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I agree with Mr. Critelli 100%. Most Cadillac plans are of zero cost to the patient. Therefore, they have no idea what their healthcare costs, and therefore no incentive to shop for price.
If patients/employees had to share in the cost of their healthcare, they would be much more discerning in their selection and use of healthcare.
I'd also add that employer-based care and individually purchased healthcare do not share the same tax advantages. Equity should be added...either tax the employer plans or give a tax break to those who buy their own care.