Since the Affordable Care Act became law in 2010, our nation has expanded health insurance coverage to millions of American families who previously lacked coverage. As a member of Congress, I gladly supported the law, which banned the practice of denying coverage to people with pre-existing conditions, closed the prescription drug "donut hole" for seniors, and created subsidies for affordable coverage.
During the debate over this landmark law, economists advanced a controversial tax provision known as the "Cadillac tax," by billing it as a cost-containment strategy. The proposal would tax health insurance premiums over a set threshold, limiting health care spending by discouraging lavish health insurance plans enjoyed by the top one percent -- CEOs and highly-paid executives. In reality, the tax will punish working families, older workers, and women -- particularly those who live in more expensive regions of our country.
I am leading a bipartisan coalition of legislators, in partnership with an unprecedented breadth of allies in the business, labor, and health policy communities, to repeal this flawed section of the law -- leaving intact the beneficial structure that has accomplished so much.
In the five years since I initially led opposition to the Cadillac tax, the true impacts of this unfair provision on older workers, women, and families in high-cost regions have become clearer. Top actuarial firms including TowersWatson have concluded that these factors, not generosity of health benefits, play a much larger role in determining the cost of health insurance premiums.
Fundamentally, the tax on high-cost health plans will degrade the quality of insurance plans available to employees of all stripes -- teachers, emergency personnel, factory workers, and a myriad of others who may have negotiated for better health insurance plans by forgoing wage increases in the past. More than 70 percent of employers polled recently confirmed that they were already seeking out alternative coverage options -- lower quality plans with sharply higher out-of-pocket costs -- to avoid incurring the tax in 2018.
Because the Cadillac tax will undercut benefits and punish employees who participate in FSA and HSA plans -- those contributions count toward the threshold -- patients will bear more upfront costs when they seek out medical care. That means more patients will forgo primary care, routine checkups, and treatment at the first signs of illness.
A new study from the National Bureau of Economic Research confirms that consumers faced with higher deductibles will seek less health care of all kinds, including medically necessary care. Doctors at Lawrence + Memorial Hospital in New London, Connecticut highlighted this challenge for patients during my recent visit to the Women's Health Center. They have seen a significant percentage of patients whose mammograms (which are cost-free under Affordable Care Act changes) detected potentially cancerous tumors fail to return for additional diagnostics, citing the costs associated with the testing. Clearly, the Affordable Care Act was intended to expand access to cancer screenings and preventive treatment for women -- not to shift more patients to high-deductible plans that require greater out-of-pocket spending.
Since patients generally are not medical professionals -- and the health care market is opaque to consumers seeking price information for particular services and treatments -- they are ill equipped to determine the value of health care services. If the goal of the Cadillac tax is to reduce superfluous health care spending, as its proponents assert, then it will also reduce necessary health care spending, which leads to poorer outcomes for patients.
The Affordable Care Act has made great strides in rewarding health care providers for value, rather than quantity, of care. As a result, providers are seeking to contain costs while improving outcomes for patients. The Cadillac tax would disincentivize valuable care, as consumers are forced to decide whether or not to make a costly visit to the doctor. The tax is a blunt, indiscriminate instrument that must be repealed as soon as possible before it reduces access to necessary care, and damages the important progress we have made in reducing uninsured rates and intelligently bending the cost curve of health care spending.
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