The Baucus health care bill version of Obamacare relies on several funding mechanisms.  One of those mechanisms is a tax on Cadillac insurance plan.  To many Americans, this means some plan that only rich fat cat CEOs or billionaires can have.  However, many Americans that have employer based health care are deemed Cadillac insurance plans by the Baucus health care bill.  This leaves many Americans asking, what is a cadillac insurance plan.

So how do you know if you are in a Cadillac insurance plan?

The Baucus health care bill defines a Cadillac plan as insurance coverage that costs $8,000 per year for individuals and $21,000 per year for family coverage.  You see the current details of the Baucus health care bill here, which will put you ahead of many of your representative in congress.

So how do you calculate the total cost of your insurance plan?

… many Americans will see the cost of their health insurance go up under the Baucus health care bill as they currently participate in Cadillac insurance plans.

Many employeer based plans have the employeer covering between 60 and 80 percent of the costs.  To calculate the costs, take your monthly cost for health, dental, and vision coverage, divide it by your percentage, and add your total monthly cost to that number.  You then have to multiply that by 12 to get the total yearly cost.

For example, if you pay $350 per month for health coverage and your employer covers 75%, take 350 and divide it by .25 which comes to $1,400.  This is what your employer pays per month.  Add your $350 to that which comes to $1,750.  Multiply that by 12 resulting in $21,000.  You also need to include participation in FSAs or HSAs when determining your total cost of the plan.

The end result is that many Americans will see the cost of their health insurance go up under the Baucus health care bill as they currently participate in Cadillac insurance plans.  This would seem to be counter to the goal of the bill to make health care insurance more affordable.

4/2010 Update:  The passed version of the bill after passage of the reconciliation bill was added defines a Cadillac plan as a plan that costs $10,200 for an individual or $27,500 for a family.  The tax becomes effective in 2018.

Today in the WSJ, Karl Rove details some of the tricks that were used in the Baucus health care bill to get to those numbers.

One of the accounting tricks is that the bill is designed to impose new taxes and over $120 billion in medicare reductions between 2011 and 2015.  The bill doesn’t start spending until 2015 and doesn’t fully implement spending until 2017.  This means that there is 10 years of funding covering a few years of spending.  The calculations have not been performed with 10 years of funding and 10 years of spending.

Hotair.com is reporting that Democrats are also introducing a second bill that although not part of the Baucus health care bill, puts back spending that the Baucus bill intentionally left out.  In effect, they kept the total cost of the bill down by hiding costs in a separate bill that isn’t being heavily followed in the media.

This additional bill puts the total cost of the Baucus health care bill over $1.1 trillion and above limit of $900 billion that President Obama put out as a goal.

There are also numerous flawed funding assumptions.

For example, the bill assumes that employers that drop health care for employees will increase the salaries of those employees equal to the amount that the employer was paying for health care.  Both the employee and the employer would pay more in taxes and fines. 

Employers who drop coverage would do so presumably to lower costs as the fines for dropping coverage would be lower than what they were currently paying in health care contributions.  No employer would increase the employee salaries to the point that the extra salaries and fines would be equal or more than the employer was paying before.

The bill would also tax “Cadillac” health insurance plans to raise funds.  The bill further assumes that the revenues would increase 10 to 15% per year.  These costs would be passed on to consumers who would most likely opt for cheaper plans with less coverage.  People would not flock to very high priced plans increasing revenues as predicted.

The American people need to demand that our government give us a true accounting of spending bills without trying to hide the true costs through accounting tricks and flawed assumptions.  Given the fact that most Americans and undoubtedly most of our representatives in congress will bother to read or take the time to understand the bill, transparency and truth need to be made available.