A study published in Health Affairs argues that the 40 percent excise tax on “Cadillac” health insurance plans included in the Senate’s health care reform bill (HR 3590) may not have the desired results.  The authors note that only 3.7 percent of the variation in cost of coverage can be explained by benefit design while only 6.1 percent is attributable to benefit design and plan type (e.g. HMO, PPO).  The authors argue that, because most variation in health insurance premiums remains largely unexplained, the proposed tax may not achieve its goal.

Gabel, et. al. (2010). Taxing Cadillac health plans may produce chevy results. Health Affairs 29(1):174-181. Published online 3 Dec 2009. doi: 10.1377/hlthaff.2008.0430. http://content.healthaffairs.org/cgi/content/abstract/hlthaff.2008.0430

Authors: Jon Gabel, Jeremy Pickreign, Roland McDevitt & Thomas Briggs