On Tuesday, December 15, bi-partisan lawmakers reached a tentative agreement to delay implementation of the excise tax. As a key component of the Affordable Care Act (ACA), this tax was intended to help fund the new healthcare legislation, but more importantly, to discourage employers from offering overly-generous health benefits. The excise, or "Cadillac" tax, as it is often called, will only apply to more expensive health plans ($10,200 for an individual, $27,500 for a family) is slated to go into effect in 2018. However, with a tentative deal reached as part of a government spending bill, the tax would not go into effect until 2020.
The White House is concerned this delay will undermine the effectiveness of the ACA, as the tax was intended to help slow-down health care spending and provide billions of dollars in revenue to supplement the cost of the bill. However, according to a recent article in the Washington Post, Tom Leibfried, a health-care lobbyist for the AFL-CIO, said “we don’t buy the logic” that the tax’s ripple effect would drive down costs. Employers, he said, already have been eager to lower their expenditures on employee benefits but that has not led to major reductions in health-care prices. “Increasing the workers’ pain” through skimpier health plans “is not the best way to target that problem,” Leibfried said.
Even with the Cadillac tax postponed until 2020, companies would still cut benefits in anticipation of it. For that reason, Leibfried said, “We expect that means we are going to work to repeal the tax fully.” All three Democrats who are running for President have embraced the idea of repealing the Cadillac tax, not just deferring it. The Republicans favor abolishing the ACA.
Labor Campaign for Single Payer produced briefing paper, "Turning Chevys Into Cadillacs: The ACA Excise Tax and the Future of Healthcare Bargaining." Download the PDF.
Published December 18th, 2015Like this post? Consider sharing it on
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