The House voted Wednesday to repeal the Affordable Care Act’s “Cadillac tax“, the only policy on the books targeting the employer tax break that is the bedrock of the U.S. healthcare system.
This 40% excise tax on high-cost employer plans has never taken effect, but a full repeal would come with a hefty $200 billion price tag. House lawmakers passed it 419-6 without any way to pay for it.
The 367 co-sponsors of the bill by Rep. Joe Courtney (D-Conn.) included members of the progressive wing of the Democratic Party like Reps. Pramila Jayapal (D-Wash.) and Ro Khanna (D-Calif.)—who have championed replacing the employer-based system through Medicare for All—as well as conservative Republicans.
Unions, employer groups and insurers who have fought the tax from the beginning are driving momentum for congressional repeal. Insurers have warned for years that costs for people in the employer market would climb if the tax ever took effect. America’s Health Insurance Plans welcomed the House vote as a “bipartisan solution to bring down health care premiums and costs.”
Democratic leaders are framing the effort as part of the party’s push to lower healthcare costs, a position stated Tuesday by House Majority Leader Steny Hoyer (D-Md.).
But supporters of the tax are blasting the effort and warning that if Congress forges ahead with a repeal lawmakers could doom any attempt to reform the employer tax break that many criticize.
“I think this is a horrible idea, almost regardless of your ideology,” said Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget, a nonpartisan think tank.
He framed the repeal for Democrats as cutting the legs out of Obamacare and, for Republicans as restoring the tax break for employers that GOP leaders like former House Speaker Paul Ryan lambasted.
It’s unclear whether the Senate will tackle repeal, although a companion bill sponsored by Sen. Mike Rounds (R-S.D.) has collected 42 co-sponsors.
“The only reason they haven’t repealed it so far is the scoring issue,” said Joseph Antos of the conservative-leaning American Enterprise Institute. “However, given the enmity between (House Speaker Nancy) Pelosi and (President Donald) Trump, it’s hard to predict where Republicans would go on this.”
He also noted the long list the Senate has to work through in the next few months as a potential stumbling block, particularly since Congress will leave soon for August recess.
“The real action will be in September when the Senate comes back, and then we’ll see how everybody feels—not necessarily about this issue but about themselves,” Antos said.
A spokesman for Senate Finance Committee Chair Chuck Grassley (R-Iowa) said the senator is open to considering a full repeal, while noting it won’t take effect until the end of 2021.
But he made it clear that when it comes to tax proposals, Grassley is prioritizing a deal on the expired or soon-to-expire tax provisions that the Senate and House committees haven’t been able to agree on.
Along with the Cadillac tax repeal, insurance companies are lobbying hard for another delay to the health insurance tax, which lawmakers and industry considered a lost cause earlier this year. Senate and House aides now say that a delay is still possible. Lawmakers like House Ways and Means ranking member Kevin Brady (R-Texas) are pushing for it.
Click on the links below for articles about this topic from NAHU, The Hill, and CNN.
NAHU-House Passes Full Repeal of ACA’s Cadillac Tax
The Hill-House Votes to Repeal ObamaCare’s Cadillac Tax
CNN-House lawmakers unite to kill Obamacare provision
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