Both the public and private sectors, as well as Democrats and Republicans, have joined together in an effort to repeal the Affordable Care Acts excise tax on high-cost group plans. Set to take effect in 2018, the so-called Cadillac tax would force employers to pay a 40% tax on plans exceeding $27,500 for a family or $10,200 for an individual.
While the intent of the tax is to target only high-end plans, many plans that cover middle-class Americans will trigger the Cadillac tax, Jim Klein, president of the American Benefits Council, said Tuesday during a press conference that announced the creation of the Alliance to Fight the 40, a coalition of public and private employers, unions and other organizations dedicated to repealing the tax. Average plans would trigger the tax because it fails to consider factors such as age, gender and location, he said.
This is not a tax on high-end health plans, said Terry OSullivan, general president of the Laborers International Union of North America, and it will lower the quality of health care for working families.
The Cadillac tax gives public employers with fixed budgets three poor choices, said Brian Marshall, the superintendent of San Diego, Calif.-based La Mesa-Spring Valley School District. He said his district would have to decide between reducing benefits, raising employee contributions or decreasing student services.
Also see: Politicians agree on Cadillac tax repeal
In Congress, there is bipartisan support both Reps. Frank Guinta (R-N.H.) and Joe Courtney (D-Conn.) have bills calling for a repeal of the tax. Guinta said he wants a standalone bill so no one has a reason to vote against it. We want it to be as simple as possible, he said.
The Cadillac tax has been controversial since its inception, Courtney said, and many ACA supporters, like him, understand that this is not an integral part of the law.
Courtney also questioned the Congressional Budget Offices scoring of the Cadillac tax, calling it highly speculative. The CBO estimated the tax will raise $87 billion over a decade with a quarter of the revenue coming from the tax and three-quarters from higher income-tax revenue based on the assumption that employers who reduce benefits will increase wages. That is a very unstable analysis, Courtney said.
Because of the faulty CBO score, Guinta said he hasnt encountered the problem of finding a way to make up the projected revenue that would be lost. Its logical to talk to the CBO and get an amended score, he said. The lower that score is, the less concerned Congress will be about a pay-for, Guinta said.
The coalition is united behind a full repeal and isnt interested in fixing the Cadillac tax, Klein said. We think its fundamentally flawed both in theory and in construction, he said.
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