The so-called Cadillac tax, an Affordable Care Act provision that is to begin in 2018, will very likely make many employer-sponsored health plans, not just the ones tailored for high-earners, too expensive, predicts a report by the Bipartisan Policy Center.

Cadillac plans cost above $10,200 per individual and $27,500 per family per year. Insurers offering such benefit packages will pay a 40 percent tax on any amount above that threshold — and that’s the rub.

The study, A Bipartisan Rx for Patient-Centered Care and System-Wide Cost Containment, says that employers and employees may wind up bearing the burden. If premiums increase 5.7 percent annually (the rate that is projected from national health expenditure data and one that is lower then historical growth), “the Cadillac tax would effectively prohibit half of today’s employer-sponsored health plans by 2029.”

But as we pointed out a few years ago, the reasons a plan might exceed the threshold are varied, and may have nothing to do with luxury benefits (/archives/2010/1/not-your-father%E2%80%99s-cadillac-plan).

The authors of the Bipartisan Policy Center report propose replacing the Cadillac tax with a plan that limits the income tax exclusion for employer-sponsored insurance (ESI) at the 80th percentile in 2015.*

This would be indexed to GDP per-capita growth through 2023, and GDP per-capita growth plus 0.5 percentage points thereafter. This would slow down bracket creep, but not eliminate it, so as to keep some pressure on.

Cadillac tax could effectively prohibit half of today’s employer health plans by 2029

Annual premium for plan

Projected annual premimums for family coverage

*The study states that “Under current law, employer contributions to employee health benefits, including ESI [employer-sponsored insurance] premiums and various tax-advantaged health care spending accounts, are excluded from an employee’s taxable income. Employee premium contributions are also paid with pre-tax dollars in most cases. The ESI tax exclusion is the single largest tax expenditure, reducing annual federal income tax and payroll tax revenue by about $250 billion — which necessitates higher marginal tax rates on everyone, and it also reduces revenues for state governments.”

Source: Bipartisan Policy Calculations, assuming that ESI premiums grow at the same rate as national health expenditures, as projected by the CMS Office of the Actuary

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There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.