The term “Cadillac tax” is evocative: It suggests that the health-insurance plans it would tax—through a provision in the Affordable Care Act—are to regular health insurance as a Cadillac is to a Kia. President Obama once described the levy as targeting “really fancy [health insurance] plans that end up driving up costs.”
But what many Americans may not realize is that “Cadillac tax” is in part a misnomer. While some plans that qualify for the tax may be high-end with extra benefits, or “really fancy,” not all of them are. Nor is every employee with an expensive plan a corporate executive. Over time, the number of Americans affected by the tax is expected to increase, as is the revenue the government expects to raise from their plans. The tension between the tax’s supporters and its opponents is over whether this growing pool is a positive thing for the U.S. health-care system in the long run, or whether it’s prohibitively costly.
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