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Clinton to call for nixing ‘Cadillac Tax’ on health plans under Obamacare

Unions generally oppose the imposition of the tax Clinton will oppose. (AP Photo/Charlie Neibergall, File)

Hillary Rodham Clinton will come out this week against a tax on generous health-care plans that is a key means of funding the Affordable Care Act she supports, but is also opposed by labor unions crucial to her presidential bid.

Clinton plans to announce that she seeks a repeal of the so-called “Cadillac tax” on premium health plans, her campaign  said Tuesday.

"Too many Americans are struggling to meet the cost of rising deductibles and drug prices. That’s why, among other steps, I encourage Congress to repeal the so-called Cadillac Tax, which applies to some employer-based health plans, and to fully pay for the cost of repeal," Clinton said in a statement.

“My proposed reforms to our health care system would more than cover the cost of repealing the Cadillac tax," she said.

Clinton will propose alternative revenue plans to make up for the lost money, her campaign said. Clinton’s position was first reported by the New York Times.

Clinton frequently praises the 2010 ACA, often known as Obamacare, but says it does not go far enough. She has proposed $250 monthly caps on out-of-pocket costs for prescription drugs and three unscheduled doctor visits annually that would not count against a patient’s insurance plan deductible.

She had indicated skepticism about the Cadillac tax and said she was examining possible changes. The tax is a major “pay-for” to offset increased costs under the ACA, and was one of the major cost-curbing mechanisms in the law, with then-CBO Director Douglas Elmendorf calling it one of two "powerful policy levers for encouraging changes in medical practice.”

Unions generally oppose imposition of the tax because generous health-care plans have been a perquisite given to union workers in lieu of pay raises or other compensation. Under the ACA, companies could get out of paying some or all of the tax by replacing expensive and relatively luxurious health-care plans with cheaper alternatives.

Clinton rival Sen. Bernie Sanders (I-Vt.), along with several other progressive senators, introduced a bill last week to repeal the tax.

The next president will inherit some of the less palatable elements of the ACA, which takes effect in phases, including introduction of the Cadillac tax. It would impose taxes on employers for health-care plans whose premiums exceed $10,200 a year for individuals and $27,500 for families.

David Weigel and Karen Tumulty contributed