Tuesday, December 22, 2015

ACA Alternative

The American Enterprise Institute posted a thought provoking legislative alternative to the Affordable Care Act yesterday.  For example (p. 20),
The [Cadillac] tax will be assessed in 2018 [now 2020] on plans with individual premiums in excess of $10,200 and family premiums in excess of $27,500. These thresholds are set to increase with inflation. Employers pay the same tax, regardless of the income of the worker. Given that there is an economic trade-off between wages and benefits, the Cadillac tax disproportionately harms lower-income workers with generous health benefit plans. Thus, while the Cadillac tax imposes some level of cost discipline into employer-sponsored coverage, it does so in a poor manner. The better approach is to retain the discipline created by the Cadillac tax but without the painful side effects of a new excise tax. One such approach is to place an upper limit on the amount of employer-paid premiums that is tax-free to workers. 

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