Democrats, many of whom grudgingly supported the cost containment effort as part of the landmark health-care law nine years ago, argued Wednesday that it would be a de facto tax on working families.
“Today, we’ll honor our promise to the hard-working men and women of the labor as we lift the Cadillac tax protecting health benefits that workers have negotiated,” House Speaker Nancy Pelosi (D-Calif.) said Wednesday.
Delayed repeatedly by Congress, the tax would impose a 40 percent excise tax beginning in 2022 on employer-provided health benefits that exceed $11,200 for an individual and $30,100 for a family. The idea was to reduce soaring health-care costs by discouraging employers from offering such generous plans, as well as to pay for the landmark law passed by a Democratic Congress in 2010.
The Senate has a similar bill with bipartisan support, but Senate Majority Leader Mitch McConnell (R-Ky.) has not yet said whether he will bring it up for a vote. McConnell has been reluctant to take up health-care legislation, Senate aides said, because Democrats probably would use the opportunity to criticize Republicans’ and the administration’s efforts to dismantle the Affordable Care Act.
Health economists warn that repealing the tax would add to the national deficit and increase health-care spending. The nonpartisan Congressional Budget Office estimated repeal of the tax would add $197 billion to deficits over a decade.
“The full repeal of the Cadillac tax would eliminate one of the most consequential policy levers to actually lower health care costs,” said Benedic Ippolito, a health economist at the American Enterprise Institute. “When it comes to sensible policies about what to do about spending, ironically there’s bipartisan, bicameral agreement that we absolutely shouldn’t do anything.”
The House passed the legislation using an expedited procedure that allows the chamber to pass a tax cut without an offset as long as there is a two-thirds majority supporting the measure.
Proponents of the measure argue that workers would bear the brunt of the tax, largely through decreased wages.
“The resounding, bipartisan passage of legislation repealing the ‘Cadillac Tax’ is a victory for families with job-based health coverage,” said American Benefits Council President James A. Klein. “We urge the Senate to promptly approve the measure and send it to the president for signature.”
If the tax does go into effect in 2022, about one in five employers offering health benefits would be affected unless they changed their offerings, according to an analysis from the Kaiser Family Foundation. The analysis also found that the tax would affect more employers over time — up to 37 percent of employers by 2030.
Republican and Democratic lawmakers have battled each other over the future of Obamacare since its passage. Republicans have vowed to repeal and replace the law for nearly a decade, but failed to do so repeatedly in 2017 when they controlled both chambers of Congress and the White House. In their overhaul of the tax code in 2017, congressional Republicans zeroed out the ACA tax penalty for those who did not purchase health insurance.