Today on THCB Spotlights, Matthew chats with a couple of the OGs from the original days of Health 2.0—Scott Shreeve, founder and CEO of Crossover Health, and Jay Parkinson, founder of Sherpaa, who were the first ones doing something different in terms of doctors figuring out this digital health stuff. The two of them ask the question, what would happen if you married the physical world with the online world and created a new care model that exceeds at both? While Scott was putting in onsite primary care clinics to employers like Apple and Facebook, he realized Crossover wasn’t reaching 70% of the people they were contracted with because many employees were geographically remote. Meanwhile, Jay was doing something similar with virtual primary care—which differs from traditional telehealth in that his model enables a true relationship between patient and provider—and the rest is history.
Beginning in 2018, high-cost, private sector health plans will be subject to a special levy, popularly known as the “Cadillac plan” tax. Under a provision of the Affordable Care Act, health plans must pay a tax equal to 40 percent of each employee’s health benefits to the extent they exceed $10,200 for individual coverage and $27,500 for family coverage
In many ways, the Cadillac Plan tax is a stealth tax. It doesn’t even become effective until eight years after the Affordable Care Act passed Congress. And back in 2008, the thresholds were so high that it must have seemed like the tax would apply only to a handful of employers. But health care inflation has a way of escalating base line costs through time.
So much so that a Kaiser Family Foundation study estimates that the first year it is applicable, one in four employers will be subject to the Cadillac plan tax unless they change their benefits. Going forward, the thresholds are indexed to the rate of general inflation – which historically is well below the rate of medical cost inflation. As a result, the study estimates that the share of employers potentially affected could grow to 30 percent by 2023 and 42 percent by 2028.
Recently we wrote that it was well past time to end the employer mandate in the Affordable Care Act. In light of some commentary, we thought it best to revisit this issue in more detail. It seems that most of the support for the employer mandate comes from a misguided understanding of why employers are currently the primary source of private health insurance. It is explicitly not because of a sense of “responsibility” to the employee, at least not any more responsibility than they feel when they pay employee wages for their work.
Here is a basic summary of how labor markets work, based on decades of very widely accepted academic research and practical experience. Employees receive compensation from their employers in return for their work product. In other words, employers aren’t running charities for their workers, but neither are workers volunteering their time at firms. Each expects something from the other. Some employee compensation comes in the form of cash wages and some in the form of fringe benefits such as health insurance, pensions, free coffee, parking, etc.Continue reading…