An alliance that includes the nation's largest health insurers as well as a broad-based group of employers, unions and other stakeholders on Tuesday formally launched a campaign to overturn the "Cadillac tax," a 40 percent excise tax on health plans whose benefits are deemed overly generous.

 

The excise tax, part of the Affordable Care Act, goes into effect in 2018 and would apply to employer-sponsored health coverage that exceeds certain benefit thresholds -- initially $10,200 for individual coverage and $27,500 for family coverage.

 

Initially, it was thought the tax would affect only a select few plans, but many employers are already reducing benefits to stay below the tax thresholds, according to the coalition, which calls itself the Alliance to Fight the 40.

 

"This tax does not hit 'Cadillac' plans," said James Klein, president of the American Benefits Council. "It hits ordinary plans that are expensive simply because they cover many people whose health costs are generally higher than average -- women, older and disabled workers, and families who experience catastrophic health events."

 

A study conducted last year by consulting group Towers Watson found that 48 percent of large employers will hit the Cadillac tax thresholds in 2018, and that figure is expected to rise to 82 percent by 2023.

 

"This tax strikes at the heart of the employer-sponsored health care system, which provides coverage today to over 150 million Americans," said Kate Hull, executive director of the Corporate Health Care Coalition. "Employers have worked hard to provide efficient, affordable, quality health care to their plan participants. As currently structured, the excise tax discourages innovation by penalizing employers for using tools to control costs and improve the health of their workforce -- from on-site medical clinics to employee wellness programs and other initiatives."

 

Locally, health benefits expert David Lind has been warning for several years about the coming impact of the Cadillac tax. Click here to read a September 2012 blog he wrote on the subject.