The "Cadillac tax" is exposing painful divisions within the Democratic Party.
The split among Congressional Democrats is between those who want to do away with the 40 percent excise tax on expensive health plans and those who say that doing so would undermine a key funding mechanism of the law and hamper the long-term goal of reining in the rapid growth of health care costs.
Some of the divisions are political and some are philosophical. Many in the party's left flank have close ties to unions, which are bitterly opposed to the tax, which will target some of the generous health benefits that they have negotiated for their members over the decades.
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Less liberal Democrats in swing districts are likely less concerned about criticism from the left and more worried about opposition to the tax by business groups, as well as the simple fact that the tax is unpopular, according to opinion polls. A tax on health care is not a policy that, upon first glance at least, most Americans are excited about.
With the notable exception of President Obama, all of the party leaders, including its two top presidential candidates, say they favor some type of repeal of the Cadillac Tax. Congressional Democratic leaders are pushing for a two-year suspension of the tax to be included in an end-of-the-year tax bill.
Sen. Mark Warner, D-Virginia, a moderate who supports keeping the tax in place, suggested Congress would never restore the tax after voting to delay it. Indeed, in an era of partisan gridlock, the only thing the parties ever seem to agree on is indefinitely delaying tax increases.
"A two-year delay, I'm concerned, turns into a permanent delay," he said to The Hill. "It was one of the key areas of cost containment, and in a state like mine where we're still trying to get Medicaid expansion, and state legislators say the federal government's not going to keep the existing commitments, when you take away one of the substantial pay-fors for health care reform, you strengthen their case."
What remains unclear is how willing the White House is willing to fight over the issue. Is the president willing to veto a large piece of legislation that affects the Cadillac Tax and risk a possible veto override? For now, Obama is remaining quiet.
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