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7.2 Million Cadillac Plans

The Washington Post’s Keith Richburg published a health care article October 1st asking: “What Makes a Health Plan a ‘Cadillac’?” Richburg reports:

In the scramble to find money to overhaul the health-care system, Senate Democrats have been eyeing the most generous insurance packages — what some call the “Cadillac” plans — as a lucrative target to tax.

But as the competing proposals are debated on Capitol Hill, a fundamental challenge has emerged: Few people agree on exactly what constitutes a Cadillac plan.

But then, fifteen paragraphs later we learn:

Finance Committee Chairman Max Baucus (D-Mont.) initially proposed an excise tax of 35 percent on insurance companies for plans that amounted to $8,000 for an individual and $21,000 for a family. Those amounts were initially set to increase with inflation.

So it turns out Congress does have a black and white definition of what a “Cadillac” plan is. But Richburg then fails to report on just how many Americans would be affected to Baucus’ new health care tax. Heritage Foundation fellows Robert Book, Guinevere Nell, and Paul Winfree crunched the numbers and they found that more than 7.2 million households–almost 94 percent of those paying the excise tax–would pay higher taxes on their health insurance than on their income, including 573,000 households that currently pay 10% or in taxes on their income.