The Times story elicited predictable responses. Matt Yglesias wrote that this epic failure was "another piece of good news" about Obamacare, confusing cost shifting with cost reduction.
Jonathan Cohn took a more balanced approach, although he repeated the "most economists support the tax" canard (see here for refutations of the tax from qualified economists.) It's true that, as Cohn notes, our tax break for employer-sponsored health insurance are unusual. But there's no reason to believe, as Cohn claims "most economists" do, that this leads to increased use of medical services.
In fact, the OECD study shows that Americans use fewer medical services than people in other developed countries. That should put an end to these outdated and disproven claims about the tax deduction's effect on utilization -- especially since most national health systems have benefits which are more generous than the typical "Cadillac" plan in this country.
Cohn is right when he says that employers were already shifting costs onto employees before the tax came along, but the tax provides them with excellent cover and is likely to accelerate the cost-shifting. (I worked in that world for years; I know how they think and act.)
Less For More, Continued
Other developed nations pay less than half of what we pay per person on health care (on average). They have better benefits, and our mortality and morbidity rates lag far behind theirs.
Wake up and smell the formaldehyde: Our system is broken, and the "Cadillac tax" is only making things worse. It's "trickle-down economics," it's bad policy -- and it's certainly bad politics. It will hurt most people eventually -- 75 percent of households, estimates Herring -- and they're not going to be feeling grateful toward the politicians who enacted it into law.
In Part 3 of this series we'll provide a scorecard which compares the lagging "vital signs" in our health system with Obamacare's likely effects: the wins and the losses.
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