- Politicians on both sides of the aisle are taking a fresh look at the Cadillac Tax.
- The controversial 40% excise tax on high-cost employer-based health plans has already been delayed two years from its original 2018 start date to 2020.
- With the delay on the tax being only a temporary solution, legislators on both sides agree this provision of the Affordable Care Act needs further discussion, Morning Consult reported.
Even though Republicans and Democrats have made moves to repeal the unpopular tax, Democrats argue an alternative needs to be offered up to resolve the issue of the estimated $90 billion the tax was intended to draw during just its first 10 years.
The intent of the Cadillac Tax also seeks to help level the playing field between people getting employer-sponsored health coverage and those purchasing ACA plans as well as incentivize employers to offer reasonably priced health plans. That would favorably impact the federal government by controlling what employers offer employees in the form of taxable wages vs. nontaxable health benefits. Without the tax, it's unclear how such goals might otherwise be met.
Given the delay on the tax, it's unknown how much impact it may have already had or will have in the future if it survives. However, according to a survey by the American Health Policy Institute reported in 2015, almost 90% of large employers had already taken steps to prevent their plans from triggering the tax.
“The best way to expand health insurance choices for individuals is to truly equalize the treatment of employer purchased and individually purchased coverage,” Morning Consult quoted Avik Roy of the Manhattan Institute a Thursday hearing on the subject.
The publication noted conservatives have previously supported similar ideas to cap tax breaks on benefits at certain levels, but that supporting a version as part of Obamacare goes against their political messaging. Democrats, meanwhile, argue opponents need to offer a concrete alternative.