A bipartisan group in the U.S. Senate is pushing for the repeal of one of the least popular provisions of the Patient Protection and Affordable Care Act. Sens. Dean Heller (R-NV) and Martin Heinrich (D-NM) introduced a bill this week that would repeal the so-called Cadillac tax, which levies a 40 percent excise tax on expensive health plans — ones that cost more than $10,200 for an individual plan or $27,450 for family plans. The tax would go into effect in 2018.
"My hope is that reasonable members of Congress on both sides of the aisle will join us in this important, bipartisan endeavor to protect middle-class Americans," Heller said in a statement.
There is little doubt the bill will be approved by the GOP-controlled Congress, but what remains unclear is whether enough Democrats support the provision to prevent an override of President Obama's likely veto.
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The tax has provoked backlash from businesses who provide expensive plans as well as unions and individuals who benefit from them. While businesses don't want to pay more taxes, unions worry that such a policy will discourage employers from negotiating generous health benefits for workers.
Furthermore, even some consumer-driven health care measures, such as health savings accounts, could be impacted by a tax that is ostensibly targeting plans that are considered lavish. That's because employee contributions to HSAs are taken into account when assessing the cost of a plan.
Some, such as Rep. Joe Courtney (D-CT), a big repeal backer in the House of Representatives, have argued that the tax disproportionately impact those living in more expensive parts of the country, such as the Northeast and West Coast.
The National Association of Health Underwriters (NAHU), one of many industry groups opposing the tax, released a statement Friday in response to repeal efforts that argued that the tax was based on flawed economic analysis.
"The Affordable Care Act created the 40 percent excise tax for high-cost employer-sponsored health plans as a means of controlling health plan costs and as a funding mechanism for the law," stated Janet Trautwein, CEO of NAHU. "However, the cost of medical care is what truly drives health insurance premiums and this tax does very little to rein in health care costs."
Trautwein further argued that plans designed to address high-needs patients were being subjected to a tax aimed at "overly-generous" plans. She also characterized the repeal of the tax as an effort to "protect employer-sponsored health coverage."
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