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The strongest argument that the skeptics make is that this is all good in theory, but it's doesn't work in practice. The administration has sold the excise tax as a populist measure, a tax on "Cadillac plans." It is that, at least in part. But plans aren't only expensive because they're generous. They can also be expensive because someone in the plan got very sick, or because the people in the plan are pretty old.
Before getting into that, it's worth remembering not to go too far. More expensive insurance really is more lush insurance. Anyone who has chosen between their work's PPO and its HMO knows that. And all employer-based insurance, right now, is exempt from taxes -- a regressive and cost-increasing decision that this barely begins to redress. This is a tax that should already exist, and it should exist on every dollar of health benefits, not just every dollar above $23,000.
But it is true, for many employers, that the variation in the cost of their plans comes for reasons other than plan generosity. But so what? If small businesses are getting a bad deal on the market because they're full of bad risks, then they now have the option to come into the exchange, which joins them to a far larger risk pool with far less variation. And within the exchange, the excise tax should work in a much more straightforward fashion. That's a transition we want to encourage.
As for plans for older folks being more expensive than plans for younger folks, the tax has a higher threshold for people over 55 (it's $26,000, assuming I remember correctly). But if that's not enough, then it's a perfectly reasonable idea to make it blind to age: You can tax the value of the plan if it were being applied to a demographically neutral group, and such ideas are under active consideration. That should take care of that problem.
For all that, no one should be under the illusion that this tax will not cause some pain, or upset some voters, or assail the plans of some middle-class workers. It will. But it's worth saying this very clearly: You cannot design a cost control that won't. The health-care cost problem is not a problem of the rich and famous. It is not a problem that can be painlessly solved by limiting insurance company profits (much, much too small) or reducing payments to providers (which would mean long waits and less access). Everything has tradeoffs. Everything has losers.
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