Archives: Cadillac Plans, Mandates, and the Proletariat

This appeared at Huffington Post on January 3rd, 2010. Editors let it die in obscurity while promoting screeds about the health care bill to the front page; the latter were poorly-argued, factually-challenged, and filled with typos — but met the firebagging requirements of the editorial staff. The experience led to my decision to stop posting there.

Perhaps my worst job ever was the better part of two years at a pharmacy benefits call center. Among the calls I remember was a retired GM worker who, like many of his union friends, had been shuffled off the company’s retiree health plan onto Medicare (PDF). He was used to a “Cadillac plan” — in fact, he earned it by building Cadillacs.

Overall, he was very satisfied with Medicare; the only problem was that his previous, “good” insurance paid for erections, while Medicare will not.

As a man, I am quite sympathetic to his desire to have a sex-life. Hopefully, I will never need to inject medication directly into my penis as he did (Viagra is cheaper, but isn’t covered by Medicare either, and he could not take it due to heart complications). So he was paying $1,100 for a one-month set of doses.

Bear this in mind: even with the ‘Cadillac plan,’ someone was telling him how many erections he could enjoy each month. They also charged him a larger copay for the medicine (“Tier III,” in industry parlance). Most insurance plans don’t cover it at all. Now he had to pay for erections on his own, just like most men in America, but that was the only difference between Medicare and his previous coverage.

I’m happy for union workers who’ve earned “better” plans through collective bargaining. Heck, I wish everyone could enjoy the VHA’s world class single-payer health care that covers my major medical. But for primary care, I must pay cash at the window; I could not afford the insurance plan the call center offered.

This is often true of large corporations: they avoid paying for employee health care by choosing expensive policies to deter the employees. Just ask anyone who works for Wal-Mart. So you’ll also excuse me, then, if I’m still somewhat unsympathetic on the subject of Cadillac plans when most of us working stiffs can’t afford any plan at all.

I worked for a corporation taking advantage of America’s third world. The CEO, whose newsletter popped up on my screen every week to indoctrinate me on company values, had a Cadillac plan. So did the company VP who visited the call center twice a year to hand out t-shirts with the company logo.

The guy running the call center? Nope. My supervisor? Nope. The guy who came down from corporate and trained me? Don’t be silly. Most of us riffraff would settle for a plan that’s simply affordable, and the health care bill being worked out in conference committee next month would make that possible.

It would accomplish this through subsidies to the poorest earners and taxes on the highest earners, including excise taxes on Cadillac plans. Any number of bloggers is telling me that Cadillac plans are essential, but that’s rubbish: the average family health care plan today costs $13,500. The Senate bill wouldn’t tax family plans costing less than $23,000. Individual plans would be taxed if they cost more than $8,500; the average basic individual policy costs far less.

I just don’t believe there’s a problem here.

The GOP is counting on people like me to get mad at Democrats for taxing the sort of expensive health care plans we cannot afford and to which we have no access anyway. The media is warning us the middle class will revolt when plans cost less, which is just silly. Progressives have joined the chorus — mainly because of organized labor, I think — but none of these arguments resonate with me.

First, the bill would subsidize basic insurance plans. Yes, the House should insist on raising the government contribution levels for lower incomes as well as the poverty-line calculations that determine who gets subsidized. But the net effect is that basic plans will cost less for everyone except the highest earners.

Second, Cadillac plans offer more exotic care (like ED injectables) but not better outcomes. Qualitatively, there’s little to no difference. Rather, a Cadillac plan just lets you waste money by skipping the network speed-bumps the rest of us deal with.

Our call center had a ‘special’ program providing ‘special’ service to one of these ‘special’ plans. Away from the call floor, we referred to those ‘special’ callers as “Star-bellied Sneetches.” The woman across the cubicle row from me was on that line of business, and the only difference between us was that she had a thirty-minute class on the plan’s pharmacy benefits package.

Woop-de-do.

We gave the exact same services, and in fact had near-matching quality reports from the call monitors. The only special thing her callers got to do was sound snooty.

Third, the tax isn’t on workers. It’s an excise tax on employers. In other words, the “Cadillac tax” gives employers an incentive to demand cheaper plans in the exchanges — and thus exert market forces to keep the cost of plans low.

If Goldman-Sachs wants to pay a penalty to cover their employees’ hair plugs and botox treatments, it doesn’t impact middle America in the least. The rest of us would like a lower cost plan, thank you very much. Some of us will be happy with any plan at all.

Ultimately, the basic problem Congress must solve — and solve as soon as possible — is not rescission, or the uninsured, or even preexisting conditions. It is the simple fact that we are all going broke to pay for health coverage. The bill won’t contain costs all by itself, but it’s a start.

The Republican Party — and the progressive “kill the bill faction” — is also counting on us to get angry over the mandate. This assumes that uninsured Americans like myself will rebel against a requirement to buy an insurance policy that nine out of ten of us already want, but currently cannot afford and to which we have no access. That’s just silly: about thirty million uninsured Americans will beg to differ.

So what if the mandate doesn’t come with a public option? It was never going to cover more than 3% of Americans anyway. Yes, as a matter of principle and deficit-reduction I am very much in favor of one; but most of us were still going to get insurance through employers in any event.

We’re not going to complain about corporate personhood — we’re going to buy insurance.

Which brings me to the mandate. This has become a scary word for something people don’t understand. Canadians have a mandate; their single-payer plan is paid for with taxes. Just like America, Canadians cannot refuse to pay taxes. But somehow, this arrangement is cheaper for their individual bottom-lines and makes it possible for my Canadian cousin to own a small business and have a family, something I can only dream about doing — even though he and I make almost the exact same income.

See, when I think on my former co-workers, the one who stands out is Sue. She sat two rows away and only had the job because employer-provided insurance would cover her diabetes. Her husband made all their disposable income running a small business. If not for her pre-existing condition, she told me one slow night, she would quit and help him with the business so they could buy an individual plan.

Getting rid of preexisting conditions and rescission makes their dream tantalizingly possible. Exactly how will this make her more likely to vote Republican?

As far as middle and lower-income America is concerned, the Cadillac concern and mandate-mongering is premature and overblown. The online left is erupting in traffic from aggravated progressives, with too much of it directed at the White House. But this is what my fellow progressives need to understand: those call floor employees all went on strike for ten minutes to watch the inauguration. Everyone applauded and cheered. These daughters of hill-folk with bad skin, anchor babies from Russellville chicken plants, and disabled vets like me — WE ARE THE PROLETARIAT.

You guys with the fancy websites? You’re not us. We’re the people who work for insurance companies, who work with insurance companies, who deal with insurance all day and serve insured people all day, but cannot afford or else have no access to insurance ourselves.

Here is what you need to know: in the end, our bottom line and continued good health is what matters to us. Interpretations of the 14th Amendment regarding corporations are not.

The bill is full of good stuff: experiments with Medicaid expansion in Nebraska. Health clinics in Vermont and elsewhere. A kind of free-enterprise/single-payer hybrid that, while imperfect, will be the greatest progressive advance of my lifetime. You cannot honestly tell me that the insurance industry wants to be limited to 15% gross profit and a cap on the size of plan costs. That makes no sense in any rational universe.

Again: imperfect, yes. The exchanges should be federalized instead of left up to states, which cannot be trusted with these things (Exhibit “A” for Alabama). Yet it was a victory even getting the public option considered in the Senate bill; it was very, very close to getting through cloture. Progressives should not only pursue a public option, they should reorient their fire on the place where sausage is actually made — because a public option was that close.

About Matt Osborne

Veteran blogging the culture wars from Alabama. Video journalist, mash-up artist, aspiring novelist, and metalhead. Expect bunnies, geekery, dark humor, and snarky empirical analysis to annoy idealists of all stripes. You can follow me on Twitter, but be ready 'cause it might get loud.
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