If the chorus of voices calling for the repeal of the excise, or Cadillac, tax gets any bigger, they’re gonna need a bigger bandwagon. Just last week, the Senate called for its repeal by a vote of 90-10. Ninety to 10. You don’t see scores that lopsided even in the first week of college football when Ohio State plays Slippery Rock Vocational Tech.
When’s the last time 90 senators agreed on anything?
Of course, it’s highly unlikely the Senate bill will ever get signed — but it is possible that a budget reconciliation bill with a rider kicking the excise tax down the road until 2020 could pass. As of now, it looks to be “a near certainty” after the House and Senate vote on the bill Thursday and Friday, a political analyst told Bloomberg.
But, it doesn’t appear to be going away altogether.
Now, anything’s possible, especially with an election coming up in just 11 months. But until we know something different, the excise tax is going to continue to be a ‘thing.’ Just what are we going to do about it?
Let’s start with what we know. We know, according to the 2015 Mercer National Survey of Employer-Sponsored Health Plans, that the number of large employers across the nation expecting to be exposed to the tax in 2018 has dropped in half in about two years, from roughly 50% in 2013 to 23% in 2015. One could expect that number to drop further with two renewal cycles still to go before 2018. So, the reality is that the tax won’t have an effect on the majority of employers right away.
We also know that, in addition to trying to discourage overly-rich plans that encourage higher utilization, the tax is — as all taxes are — a revenue generator. So, without it, where is the money going to come from?
An excuse for change
For the first time since health reform was last a national debate topic in the early ’90s, the tax exemption afforded employer-sponsored insurance plans has worked its way into the conversation in a big way. A recent study published by The Urban Institute showed that limiting that exemption would in some ways have a similar effect as the excise tax. If you thought the ACA made the earth move, well …
Look, no tax is popular. I will submit, however, that “fear of the tax” has motivated many employers to make changes to their plans that they might even wish they’d had some reason to make years ago and just might be a major contributing factor to the fact that average employer insurance cost increases have stayed below 5% for the last four years. (Source: 2015 Mercer National Survey of Employer-Sponsored Health Plans).
So, if your New Year’s wish this year is for the demise of the excise tax, all I have to say is: Be careful what you wish for.
Lane is a principal in Mercer’s Washington, D.C. office and an EBA Advisory Board member. Reach him at firstname.lastname@example.org.
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