How Good Is Your Insurance? ‘Cadillac Tax’ Looms for Large Employer Health Plans
While most companies expect health care cost increases to hold steady next year, nearly half of large employers say that if they can’t find new ways to cut costs, they’re going to cross the “Cadillac tax” threshold in 2018, according to a new study by the National Business Group on Health.
Passed as part of the Affordable Care Act and going into effect in 2018, the Cadillac tax will hit employers whose plans cost more than $10,200 for an individual or $27,500 for a family. The employer will have to pay a 40 percent tax on the cost of each plan above those levels.
Among the companies surveyed, 48 percent said that at least one of their benefit plans would trigger the Cadillac Tax. By 2020, 72 percent of employers say one of their plans will trigger the tax, and 51 percent say their most popular plan will be subject to the tax.
Related: Obamacare’s Cadillac Tax Hits the College Campus
“The need to control rising health care benefits costs has never been greater,” NGBH President and CEO Brian Marcotte said in a statement. “Rising costs have plagued employers for many years and now the looming excise tax is adding pressure.”
Employers expect keep benefit costs increases to 5 percent this year by pushing more costs onto workers via consumer-directed health plans (76 percent) and expanding wellness initiatives (70 percent).
None of the 425 employers surveyed said they planned to eliminate their health care coverage, but nearly a quarter said they’d consider offering employees a private exchange.
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Budget ‘Chaos’ Threatens Army Reset: Retired General
One thing is standing in the way of a major ongoing effort to reset the U.S. Army, writes Carter Ham, a retired four-star general who’s now president and CEO of the Association of the U.S. Army, at Defense One. “The problem is the Washington, D.C., budget quagmire.”
The issue is more than just a matter of funding levels. “What hurts more is the erratic, unreliable and downright harmful federal budget process,” which has forced the Army to plan based on stopgap “continuing resolutions” instead of approved budgets for nine straight fiscal years. “A slowdown in combat-related training, production delays in new weapons, and a postponement of increases in Army troop levels are among the immediate impacts of operating under this ill-named continuing resolution. It’s not continuous and it certainly doesn’t display resolve.”
Pentagon Pushes for Faster F-35 Cost Cuts
The Pentagon has taken over cost-cutting efforts for the F-35 program, which has been plagued by years of cost overruns, production delays and technical problems. The Defense Department rejected a cost-saving plan proposed by contractors including principal manufacturer Lockheed Martin as being too slow to produce substantial savings. Instead, it gave Lockheed a $60 million contract “to pursue further efficiency measures, with more oversight of how the money was spent,” The Wall Street Journal’s Doug Cameron reports. F-35 program leaders “say they want more of the cost-saving effort directed at smaller suppliers that haven’t been pressured enough.” The Pentagon plans to cut the price of the F-35A model used by the Air Force from a recent $94.6 million each to around $80 million by 2020. Overall, the price of developing the F-35 has climbed above $400 billion, with the total program cost now projected at $1.53 trillion. (Wall Street Journal, CNBC)
Chart of the Day - October 6, 2017
Financial performance for insurers in the individual Obamacare markets is improving, driven by higher premiums and slower growth in claims. This suggests that the market is stabilizing. (Kaiser Family Foundation)
Quote of the Day - October 5, 2017
"The train's left the station, and if you're a budget hawk, you were left at the station." -- Rep. Mark Sanford, R-S.C.