There’s not much about Obamacare that Democrats and Republicans agree on.
But getting rid of the Cadillac tax is one of the rare points of unity.
House lawmakers came together Wednesday to repeal the provision that levies a tax on high-cost health insurance plans by a vote of 419 to 6. The bill has more than 360 bipartisan cosponsors, while the Senate version has more than 40.
The vote comes as health care issues have catapulted into the spotlight in recent weeks. The Trump administration is continuing its quest to dismantle the entire Affordable Care Act, arguing last week in an appellate court alongside a coalition of Republican states who say the law is unconstitutional. Congress is looking to find bipartisan ways to lower drug prices and end surprise medical bills. And the Democratic candidates for president are starting to snipe at one another as they promote their proposals to get more Americans insured.
The Cadillac tax has been controversial since it was included in the Affordable Care Act in 2010 – so much so that Congress postponed its implementation date twice.
The provision levies a hefty 40% tax on the value of employer-provided health coverage above a certain cap – initially, projected to be $10,200 for individual coverage and $27,500 for family plans in 2018, when the tax was supposed to start. It is now set to begin in 2022.
The goal is to control the growth of health care spending: Eliminating pricier benefit plans will curtail excess health care usage.
Employers and unions quickly banded together to fight it, fearing they’d have to curtail workers’ health benefits to avoid the tax.
“Congress is catching up to what American voters and businesses know all too well. We can’t control health costs by taxing health coverage. Finally repealing the ‘Cadillac Tax’ would be a step in the right direction, and none too soon,” said James Klein, president of the American Benefits Council, an industry group for large employers.
At first, the tax is expected to mostly curb benefits for executives and union workers who negotiated generous plans. But soon it will capture more people, since the caps will rise each year with inflation.
Already, the looming tax has accelerated increases in workers’ deductibles and out-of-pocket costs, which help keep premiums down and do not figure into a health policy’s value, experts say.
Premiums aren’t the only consideration. Opponents say wellness programs, on-site health clinics and tax-free contributions to health savings accounts are all contributing to the value of a health plan, since these all factor into plan costs.
About one in five employers offering health benefits are projected to have at least one plan that exceeds the cap in 2022, according to the Kaiser Family Foundation. When potential flexible spending account contributions are included, that share rises to nearly one in three.
The tax, however, did have its fans – primarily health and tax economists.
Repealing the provision will set back efforts to slow the growth of health care costs and reduce federal revenue, said Paul Van de Water, senior fellow at the left-leaning Center on Budget and Policy Priorities.
“It’s one of the ACA’s most important cost-containment measures,” he wrote in a post recently. “It will discourage employers and employees from buying unusually high-cost health coverage that promotes the excess use of health care.”
The repeal is expected to increase the deficit by nearly $200 billion over 10 years, in part because of the loss of the tax revenue and in part because eliminating the levy will prompt employers to provide a larger share of compensation as non-taxable health benefits, according to the Congressional Budget Office.