Let's take a bit deeper dive into the controversial "Cadillac" health plans excise tax in the Senate's version of health reform, which has been supported publicly by President Obama as a way to create revenue for reform while bending the cost curve.

How would it do that? In theory, 'rich' plans encourage excess health care utilization since plan participants (consumers) have little skin in the game - they are desensitized to underlying costs due to low deductibles, copays, out-of-pocket limits, etc. Taxing the "excess value" of such plans would encourage sponsors to reduce benefits to get costs under the taxation threshold, which in turn would drive consumers to be more vigilant in their health spending - and... shazam! - the trend line flattens.

A nice theory, certainly one with potential to make a positive impact on overall spending. However, in its present form, the Senate bill misses a critical point clear to most employers sponsoring a health plan - the cost of the plan does not necessarily or directly correlate to the benefit levels it delivers. As such, employers in industries based in higher cost areas and staffed with those of less favorable demographics face the double whammy of their modest plans already costing more AND a big new tax load on top.

Some recognition of the regional/industrial risk implications have begun to be factored into evolving language in the bill, but the basic premise that high cost = high benefit levels remains, and remains inaccurate as a basis for tax policy.