Healthcare

The Tax on Cadillac Plans

I'm really torn on the excise tax on "Cadillac plans" -- insurance policies valued at $23K or more annually -- in the Senate bill.

On one hand, I would much rather see a rollback of the Bush tax cuts to pay for the subsidies and any future expansion of Medicare.

On the other hand, I agree with Ezra Klein that it's a necessary means of controlling costs. Here's the shorthand. Studies have indicated that more expensive policies don't necessarily mean healthier people and better outcomes. In other words, a less expensive plan would probably function just as well as a more expensive plan. It's like having too much house. It's nice that you have extra rooms, but what the hell do you do with them?

So by discouraging expensive plans, people are more inclined to buy cheaper plans and -- POOF! -- the cost of insurance goes down. The cost curve, as they say, bends.

But much like the mandates, it's a very difficult pitch to make to voters. Taxing the super rich isn't so tough. How about we combine the two: Why don't we tax the health insurance plans bought by people who earn $500,000 or more? Is that insane?