WASHINGTON, Nov. 6 (UPI) — The top two Democrats in Congress want to repeal one of the biggest future revenue streams in President Barack Obama‘s Affordable Care Act — the so-called “Cadillac tax” — and they feel this may be the last chance to do it.
Senate minority leader Harry Reid, D-Nev., and House minority leader Nancy Pelosi, D-Calif., have been working on the issue for months, The Hill congressional blogreported Friday, and have even held discussions with Obama about killing the steep tax — which will charge employers a 40 percent excise tax on high-cost health plans.
By 2018, the tax will kick in when health premiums exceed a total of $27,500 per family and $10,200 for an individual. The average current cost per premium is $17,545 for families and $6,251 for individuals.
The main purpose of the Obama administration’s non-deductible excise tax is to keep health care costs down in the market by penalizing employers who sponsor expensive plans. But critics say that will only lead employers to scale back or eliminate their health benefits.
Reid and Pelosi have been quietly working on the issue since the spring, sources said.
“They both want to get this done,” an unnamed Democratic aide told The Hill.
As only two months remain in 2015, sources reportedly said the present attempt to kill the tax could extend into 2016 — a year it may start to become more difficult to pass, due to the ramping up of candidates’ presidential campaigns.
Democratic frontrunner Hillary Clinton has already promised to repeal the tax before it takes effect in nearly two years.
Numerous lobbyists, organizations and corporations are also pushing for the end of the tax, as they say it directly impacts their future profitability and their employees’ well-being. A coalition of these groups have already formed Fight The 40.
“The 40 percent tax is designed in a way that penalizes employers for health care cost factors they cannot control like higher numbers of disabled workers, unusual cases of high-cost cancer or premature babies, larger families, locations in high-cost areas, employer size, or industry type, such as manufacturing or law enforcement,” the group says on its website.
The Obama administration, though, has repeatedly voiced opposition to repealing the tax — saying it’s the government’s most important tool in keeping the costs of health care down.
If lawmakers are going to be successful in repealing the tax, analysts say they will have to find a way to pay for it — which will amount to nearly $90 billion in revenue the “Cadillac tax” is expected to generate for the government.
Also, if the tax is going to be repealed, observers say, it needs to be done now.
“Members of Congress are understanding that this isn’t a 2018 issue. This is something that needs to be dealt with much sooner,” Shaun O’Brien, the AFL-CIO’s assistant health and retirement policy director, said. “People are beginning to feel the pain now.”
In recent days, opponents of the tax have communicated to lawmakers that they are willing to compromise — a proposal that would keep the tax in place, but exempt contributions to employees’ health savings accounts from the 40 percent cut.
“I think that while there is an overwhelming agreement that something must be done on the Cadillac tax, there is also the political reality that full repeal is going to be very difficult to do,” Bill Sweetnam, legislative director for the Employers Council on Flexible Compensation, said.