I apologize for actual discussing economics and health care today, but this one I couldn’t let lie.
If reducing the value of the policies held by those who are continuously employed, either by taxing them or forcing those people to move to a less comprehensive plan than their risk-aversion preferences, is going to “reduce costly distortions in U.S. health care,” the only possible conclusion is that total health care spending is going to get costlier on average.
Yes, you might argue this will reduce “distortion.” But you would have to be an idiot—or, apparently, Alan Auerbach (Strongly) or Austan Goolsbee—to believe that is a good thing.
Note the eminently-sane, just as certain, Carolyn Hoxby’s comment:
The Cad[illac] tax is meant to counter other distortions so this is a q[uestion] of whether 4th best fixes 3rd best. An economist who says he knows is wrong.
which acknowledges that this is a distortion of a distortion and, as a first-order approximation, less ideal than the status quo.
Contrast this with the silence in the face of blithering certitude from Auerbach and Goolsbee, who are happy to reduce “distortion” without noting the concomitant reduction in overall utility.