As part of the stop-gap funding bill passed this week to keep the federal government running, Congress included a two-year delay of the Cadillac tax on the most expensive and comprehensive employer-sponsored healthcare plans. EBA talked to James Klein, president of the American Benefits Council, about the importance of that provision and what else is on his group’s legislative agenda. What follows is an edited version of that conversation.
EBA: This tax wasn't to take effect until 2020. Why was it so urgent to get Congressional action now?
James Klein: Until Congress passed the additional two-year delay of the Cadillac tax, it was slated to become effective in 2020. The bill passed [this week] delays it to 2022. While that may seem like a long way away, the tax is already having a negative impact. Employers typically plan their benefits 18 to 24 months ahead of implementation. That means employers are making decisions right now on plan designs for 2020 — so it was imperative that Congress delay it now rather than wait.
EBA: This is the second time Congress has delayed implementation of this tax. Why is it so hard to just get them to permanently repeal it?
Klein: Congress sometimes likes to make incremental changes, and I think addressing the Cadillac tax may fit into that mold. The members of the American Benefits Council would definitely appreciate the certainty of full repeal rather than continuing to delay the tax, so we will continue our educational and advocacy efforts to achieve that goal.
EBA: The tax bill passed late last year repealed the ACA's individual mandate. I know you and other groups are concerned that this will cause instability in the marketplace. Why is that and what measures will you be pushing for this year to try to minimize the fallout?
Klein: Instability of the individual insurance market, resulting in loss of health coverage for many Americans, has obvious serious consequences for the people directly affected and for the future viability of the individual insurance markets in each state. Destabilization increases uncompensated care, resulting in cost-shifting from healthcare providers to large employer payers. Additionally, destabilization would make individual market coverage a less viable option for part-time workers, early retirees and those who would otherwise elect to secure coverage through an ACA exchange.
Congress should immediately take steps to mitigate loss of coverage and destabilization of insurance exchanges and the individual market. This should include a federal appropriation for the cost-sharing subsidies and adequate federal funding for risk mitigation to ensure carriers can remain viable participants in the individual market.
EBA: What other health and benefit issues are on your agenda for 2018?
Klein: Especially in light of Congress repealing the individual mandate penalties, the Council will continue to advocate for repeal of the employer mandate.
It is also imperative that the onerous employer reporting requirements be simplified. This can be accomplished legislatively as well as with explicit direction to regulatory agencies, consistent with the executive branch’s directives to reduce regulatory burdens. We will also work to simplify rules and policies governing account-based plans like health savings accounts and health reimbursement arrangements.
Of course, we will continue to make the case that employers lead the way in implementing innovative benefit plans that employees like and want to keep — and the tax treatment of healthcare coverage as well as ERISA uniformity are key pillars of our successful system that must be protected.
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