GEOGRAPHIC VARIATION
Healthcare costs vary significantly and the number of health plans susceptible to Cadillac tax will vary dramatically throughout the country. In an analysis conducted by the Commonwealth Fund, states such as Alaska and New Jersey will see at least 10% of their workers with employer coverage be subjected to the tax immediately after implementation. It could potentially be over 5 years before other states, including Idaho and North Carolina, have at least 10% of their employer-sponsored plans taxed (Figure 1). Geographical area causes the greatest amount of healthcare cost variability even after adjusting for age and gender. In locations with higher healthcare costs, the age and gender adjustments will be insufficient. We recommend that any state where the average cost of the gold-level plan is more than proposed excise tax threshold, the threshold would change to the state’s average cost of a gold level plan. This would allow for geographic differences to be taken into account, while still targeting over-generous plans. The cost of a gold plan varies significantly by location. The projected 2018 cost of a gold-level plan in Anchorage, Alaska is $13,964. This is significantly more than the $9,969 gold-level plan in Huntington, West Virginia. The adjustments for age, gender, and high risk professions would still apply with the gold-plan threshold.
Figure 1: First year in which at least 10% of workers with employer coverage are affected by the Cadillac tax
Source: The Commonwealth Fund, 2015