Democrats and unions have been steadfast in their defense of Obamacare, except for one provision: the controversial “Cadillac” tax. But will the bipartisan desire to repeal the tax be enough to get approved by President Obama?
The “Cadillac” tax got its name because it goes after very expensive healthcare plans. The tax, intended to generate revenue for Obamacare, starts in 2018, and will tax 40 percent of the value of health plans that exceed $10,200 for an individual and $27,500 for a family.
There’s some bipartisan momentum to repeal the tax, as there are two bills in the House that would do so. But neither bill has gotten anywhere in the House.
A measure sponsored by Rep. Joe Courtney, D-Conn., and another bill sponsored by Rep. Frank Guinta, R-N.H., were referred to the Ways and Means Committee. So far the committee hasn’t taken up either bill.
Even if a standalone bill could get past the House and the Senate, it appears likely President Obama would veto it.
But an intense lobbying effort has recently geared up and hopes to persuade the president to change his mind. The lobbying group Alliance to Fight the 40 was created last month to fight the tax, and is not focusing on other parts of the healthcare law.
“Our feeling is that this provision is not central to anything doing the operations of the law,” said James Klein, president of the American Benefits Council, an advocate for employer-sponsored health plans. “There is no question that the president is not supportive of this change now but we think in the face of a big bipartisan push hopefully he would be persuaded.”
The council is helping coordinate the coalition, which includes the construction worker union Laborers’ International Union of North America, mega insurer Cigna and pharmaceutical giant Pfizer.
“There is no doubt that this health care excise tax threatens every American worker and it must be repealed,” Douglas J. McCarron, president of the carpentry union United Brotherhood of Carpenters, said in a statement. The union is part of the lobbying group.
Unions are worried the tax could hurt generous benefits packages negotiated from large companies.
The tax is expected to generate $87 billion in revenue from 2018 to 2025, according to estimates from the nonpartisan Congressional Budget Office. The office estimated that a majority of that money will come from higher income and payroll taxes since employers will switch to less expensive plans.
But Klein told the Washington Examiner, “No employer that I have spoken to over the last five years believes that is what is going to happen.”
A 2014 study of large U.S. employers found that about half of the employers in the U.S. with 5,000 or more workers would be hit by the tax. The study from the consulting firm Towers Watson estimated the number would increase to 82 percent by 2023.
There is a debate over how many workers will be affected. Last year, the average health plan cost an individual $6,025 and a family about $16,834, according to data from the nonpartisan Kaiser Family Foundation.
The foundation did find that premiums are rising, and that the average family premium increased by 3 percent compared to 2013. A single coverage plan rose by 2 percent compared to the year before.
Over the past 10 years, the average premium for family coverage has increased by 63 percent, the foundation said.
Kaiser does note that premiums are rising at a much slower pace over the last five years from 2009 to 2014 compared to the preceding five-year period of 2004 to 2009.