Dive Brief:
- There is some momentum building in Washington to repeal the Affordable Care Act's so-called Cadillac tax on high-cost health plans, according to a recent article.
- The move would undo policymakers' previous goal of restructuring a tax exclusion that disproportionately benefits higher income workers and insulates all employees from experiencing most of the pain of rising healthcare costs, the article says.
- Companies and unions that over the years funneled taxable wage increases into maintaining a generous level of untaxed health benefits lost their battle to keep the Cadillac tax out of the ACA, but now have launched a lobbying group to push for two bills that are winning bipartisan support from members of Congress, according to the piece at Modern Healthcare.
Dive Insight:
Even with that opposition, the article points out, economists and insurance analysts note that most employer plans still fall well below the Cadillac tax thresholds, and that it will primarily affect higher-income people. “It's very much a tax predominantly on the rich,” said Loren Adler, research director at the nonpartisan Committee for a Responsible Federal Budget.
On the other hand, unlike salary, healthcare benefits have been untaxed since they became popular after WWII, and that, the article says, encouraged employers to beef up health benefits instead of raising wages. Experts say that it also contributed to overutilization of healthcare since employees are insulated from most of the increases in healthcare costs.
Despite the bipartisan effort to repeal or drastically change the Cadillac tax, experts view repeal as unlikely with President Obama in office and no established plan to replace the revenue, which is used to subsidize the ACA coverage expansion. So for now, the Cadillac tax will roll.
