The House voted Wednesday to repeal Obamacare’s “Cadillac tax” on high-cost health insurance plans, doling out a win to labor unions and some employers while threatening to balloon deficits and remove a tool that economists favor as a way to control health spending.
Included to help fund the Affordable Care Act’s goodies, the 40% tax on generous employer-sponsored plans has been a delayed a number of times.
House members from both parties voted, 419 to 6, to scrap it outright, before it goes into effect in 2022.
Opponents said the tax would chip away at hard-won coverage and force workers to pay more out-of-pocket, as employers reeled in generous coverage to duck the excise.
“Passage of this bill will lift the shadow that overhangs employer-sponsored plans and stop the high-deductible problem from worsening,” bill sponsor Rep. Joe Courtney, Connecticut Democrat, said.
Rep. Mike Kelly, Pennsylvania Republican, said passage proved that both parties could work together, despite ferocious spats over President Trump’s tweets targeting progressive lawmakers.
House Democrats successfully ran on a defense of their 2010 health law during last year’s midterms, but liberal lawmakers have been willing to chip away at some of the program’s revenue-raisers.
Congress has delayed its tax on health insurers, saying it causes premiums to rise, and put off a 2.3% excise on medical device sales, amid opposition from lawmakers in Minnesota, Massachusetts and other states with influential manufacturers.
The Obama White House and its economists prized the Cadillac tax on the cost of health coverage above $10,200 for an individual and roughly $30,000 for family coverage, saying the high-value plans end up paying for more care than needed, driving up health costs for everyone.
They also hoped that paring back generous health benefits would translated into wage increases.
Yet labor unions who initially backed the administration and its health law cried foul, arguing the tax would unfairly punish workers who negotiated generous health coverage in place of higher wages.
The tax is indexed for inflation in later years and would affect more and more employers.
Ways and Means Committee Chairman Richard Neal said while many provisions of Obamacare made coverage better, “this excise tax, indeed, did not.”
Three Democrats, two Republicans and one independent — Rep. Justin Amash of Michigan — voted against repeal.
Senate GOP leaders haven’t signaled whether they plan to take up the measure. It’s unclear if President Trump would sign the bill, though he detests Obamacare and the White House has supported previous efforts to delay the tax.
Repeal of the Cadillac tax is estimated to cost $200 billion from 2022 to 2029 and another $1 trillion in the decade after that, according to the Committee for a Responsible Federal Budget, a watchdog group.
“We are re-entering an era of trillion-dollar deficits, and Congress is considering yet another massive tax cut—it appears there is no end to this madness,” CRFB President Maya MacGuineas said.
“The Cadillac tax is one of the most important tools we have to control health care cost growth in the private sector,” she added. “Repealing it will drive up health care costs while adding more than $1.2 trillion to the debt over the next two decades and reducing wages by trillions over that time period.”
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