Cadillac tax--whether repealed or implemented--will affect insurers

As opposition against the Affordable Care Act's Cadillac tax is ramping up, we don't yet know whether the tax will be repealed, amended or go into effect as is. But one thing is for sure: Insurers will be affected.

If the 40 percent excise tax is implemented as planned in 2018, insurers may be asked to change their benefits package to include more plans featuring narrow networks and high-deductibles. If the tax is repealed, employers will likely have insurers change the types of plans they offer to employees, the New York Times reports.

The Cadillac tax applies to individual plans that cost more than $10,200 a year and family plans that cost more than $27,500, and surveys have found that 38 percent of large employers will likely hit the excise tax threshold come 2018 if they don't make changes to their plan design, FierceHealthPayer previously reported.

That's why employers are looking for ways to get out of paying the tax by asking insurers to change their benefit packages. For example, some employers have asked insurers to offer more high-deductible plans, Brian Marcotte, CEO of the National Business Group on Health, told the Times. Other companies will likely request that insurers create plans with much more limited provider networks or include more providers such as on-site health clinics instead of traditional physician offices.

Supporters of the Cadillac tax believe the fee helps deter insurers from offering overly generous health plans, which can incentivize people to get more medical care than they actually need.

Meanwhile, some insurers like Cigna have joined efforts with companies like Pfizer as well as union groups and associations to create the Alliance to Fight the 40. The coalition is planning to launch a formal campaign against the tax later this month, the Times noted.

To learn more:
- read the New York Times article