So I am hearing about these "Cadillac" insurance plans that have premiums above $35k.  As far as I can tell they are not your normal insurance plan with a jacked-up price but apparently there's some other sort of items that they cover.  Does anybody know what these are?  I am guessing that they are purchased by wealthy people (if for no other reason that not many not-wealthy people could pony up $3000 a month for any insurance policy).

Also... I heard it claimed today that these plans need to be taxed because that will cause "a disincentive to insurance companies to offer Cadillac plans that don't make people healthier".  How's that work?  Are the insurance companies offering these Cadillac plans at a financial loss?  Why do we care if wealthy people pay too much for super-duper insurance programs?

Seems to me the bottom line is... it is just a tax and the rest is red-herring rhetoric.

But anyway... can anybody here tell me what are the features of a "Cadillac plan" ?

But anyway... can anybody here tell me what are the features of a "Cadillac plan" ?


Due to market pressures and scientific illiteracy, insurance companies cover a lot of things that really aren't evidence-based medicine.

Let's put it this way - if you want a plan that covers a Swedish massage for yourself, and an aromatherapy session and a pedicure for your wife - as long as they're administered by an "aromatherapist" and someone who might have worked for a podiatrist at one point in their medical career, well, you can probably find one.  Botox, facelifts, or whatever other cosmetic surgeries are in vogue among the trophy wife set, you got it.  No questions asked, no deductibles.

Now, you'll pay for the privilege.  But if you were going to spend $1000/week on cosmetic procedures anyways, because it's just part of your lifestyle, why not do it with pretax dollars?

Joe Sixpack: $5000 in salary, of which Uncle Sam takes $2000.  He also gets $500/month tax-free in the form of medical insurance benefits, but his plan only covers medicine.  If he wants to spend $1000/month on recreational/cosmetic/lifestyle procedures, he pays the $1000 out of his remaining $3000 in cash.

After-tax income: $3000. 
After-lifestyle expenses: $2000.

Carl Cadillac: $5000 in salary, of which Uncle Sam takes the same $2000.  He also gets a medical plan that costs his company $3000/month, and the plan covers everything.  He doesn't pay a penny in tax on the $3000/month in benefits... and his $1000/month recreational surgery is paid for, so he keeps all $3000 of his after-tax pay.

After-tax income: $3000.
After-lifestyle expenses: hey, $3000!

If the company wants to give Carl Cadillac a $500/month plan, Carl's gonna need a $1666/month raise - because if he's paid in salary, that's how much it'll take to buy $1000/month in non-covered procedures after Uncle Sam takes his cut.

Now consider that Carl Cadillac probably isn't making $60K/year, probably more like $260K/year.  He might be pushing the 50% range once state taxes are figured in.  Another $1666/month in salary ain't gonna help -- but every untaxable dollar in fringe benefits he can get from his employer is worth almost twice of what a pretax dollar is.  And if the company likes him enough to pay $260K/year base, plus whatever his bonuses are, plus $35K/year in "medical" benefits -- you can be damn sure neither Carl nor his employer are worried about whether or not Carl's actually using $1000/month in treatments, $2000, or even $3000.  The insurance company doesn't care either -- as long as it's far enough under the $3500/month they're getting in premiums, everything's fine.  ("Go ahead and get your wife that $15K boob job - your premiums will have paid for it twice by the time the scars have healed, and we know you're not going to be getting one of those every year").  Carl has no incentive to economize on his medical spending -- and his employer has no incentive to economize on what it pays for his fringe benefit coverage.

Everybody wins but the shareholders and the taxpayers, but it's not like any of them can afford Senators :)

Due to market pressures and scientific illiteracy, insurance companies cover a lot of things that really aren't evidence-based medicine.

Let's put it this way - if you want a plan that covers a Swedish massage


Wait, wait, does it cover the other thing the masseuses do, or is that copay?

http://www.inthe00s.com/smile/07/naughty.gif

Wait, wait, does it cover the other thing the masseuses do, or is that copay?


Serious answer: Yes, there are legitimate registered massage therapists.  Swedish massage is a legitmate style.  Nope, I don't think there's any medically-thereapeutic benefit other than feeling good, a good masseuse/masseur (it's not sexual, so it shouldn't matter, right?) will ask upfront if you've got any medical conditions, so they don't do any damage... and none of it should reasonably be covered by insurance unless the planholder is willing to pay extra premiums and can get a doctor to prescribe it.  But I think the same thing about chiropractors for anything other than musculoskeletal problems, and the entire realms of lunacy and quackery that pass themselves off as "complementary and alternative medicine", but that's beside the point. *

Lulzy answer: The point is that if the answer actually matters to your insurance company, you don't have a cadillac insurance plan.

*Actually, it's not beside the point.  My premiums could be cheaper if I could say "Look, I want evidence-based medicine only.  Cut my premiums by 10%, and I can guarantee you I'll never bother you with a bogus series of $100 visits to the local quack to 'remove toxins' just because I'm an idiot to thinks it works and I don't care that my GP is getting kickbacks from the quack."

Hell, in the spirit of today's exchange between Sen. John "I don't need maternity care in my plan!" Kyl and Sen. Debbie "Your mom probably did!" Stabenow, I'll go one step further -- how 'bout a few bucks off a customer's premiums in exchange for a vasectomy/tubal ligation? 

The insurance company that already covers both sterilization and maternity/paternity claims.  In a sane market, you'd be able to accept/decline coverage for things that Just Can't Happen.  Shoot, grandma probably hit menopause during the Vietman War, and she's been paying premiums for a policy that includes maternity coverage ever since.  It's lunacy.

The insurance company that already covers both sterilization and maternity/paternity claims.  In a sane market, you'd be able to accept/decline coverage for things that Just Can't Happen. 
A friend of my mothers a while back had a vasectomy, and three years later his wife had twins.  There was a certain level of (not very pleasant) rumour going round, until a test showed his vas deferens had grown back.  Evidently this is rare, but not vanishingly so.  But a vasectomy ought to reduce paternity premiums (though maybe not STD coverage)

Being in a large, strong, well run, union I am lucky to have a "Cadillac Plan"  Health, Dental, and Optical, no pre-existing restrictions. It is all part of the negotiated package.  Pre-tax money is allotted to our health and pension funds for every hour worked.  Everyone who works a minumum of 1000 hours receives their benefits for the following year. If you are single, or have a family, it is all the same because the money is pooled to take care of everyone.  A few people actually complain, you know the type..."If I'm single why should I pay the same as a family"  Well, because someone paid for you, and if/when you have a family they will be taken care of, too.  This year I may not make that  minimum, but will be able to buy in at a reduced rate until I am eligible again.  I planned for lean years, though didn't expect to get bushwacked this bad, but I will be able to make it because of the way it is structured.  UNION YES!

Being in a large, strong, well run, union I am lucky to have a "Cadillac Plan"  Health, Dental, and Optical, no pre-existing restrictions. It is all part of the negotiated package.  Pre-tax money is allotted to our health and pension funds for every hour worked.  Everyone who works a minumum of 1000 hours receives their benefits for the following year. If you are single, or have a family, it is all the same because the money is pooled to take care of everyone.  A few people actually complain, you know the type..."If I'm single why should I pay the same as a family"  Well, because someone paid for you, and if/when you have a family they will be taken care of, too.  This year I may not make that  minimum, but will be able to buy in at a reduced rate until I am eligible again.  I planned for lean years, though didn't expect to get bushwacked this bad, but I will be able to make it because of the way it is structured.  UNION YES!


My dad had a plan similar to that, and yes, he was in a union (CSEA).

My plan, also negotiated by my union is quite generous as well, although no optical and the dental could be better.  Still, it covered my cancer treatments completely.  Everyone should have coverage as good as this.

Being in a large, strong, well run, union I am lucky to have a "Cadillac Plan"   Health, Dental, and Optical, no pre-existing restrictions. It is all part of the negotiated package.  Pre-tax money is allotted to our health and pension funds for every hour worked.  Everyone who works a minumum of 1000 hours receives their benefits for the following year. If you are single, or have a family, it is all the same because the money is pooled to take care of everyone.  A few people actually complain, you know the type..."If I'm single why should I pay the same as a family"  Well, because someone paid for you, and if/when you have a family they will be taken care of, too.  This year I may not make that  minimum, but will be able to buy in at a reduced rate until I am eligible again.  I planned for lean years, though didn't expect to get bushwacked this bad, but I will be able to make it because of the way it is structured.  UNION YES!



I don't think that is what they mean by a "Cadillac plan" because to be a Cadillac plan it has to cost $35k a year or more.