Health Care

House votes overwhelmingly to repeal Obamacare "Cadillac" tax

House votes overwhelmingly to repeal Obamacare

Despite the political risks of tampering with employer coverage, policy experts and economists across the political spectrum argued that the tax would start to get at a fundamental reason behind high USA health-care costs.

The "Cadillac tax" has never gone into effect, since lawmakers kept delaying it. Wednesday's 419-6 vote increases chances that the Senate will follow the House, going for a full repeal.

The tax is one of the few parts of the ACA that generates bipartisan disdain, as traditionally Democratic allies such as unions have called for its repeal.

"If we fail to repeal the Cadillac tax, we will leave working families with less healthcare coverage, higher out-of-pocket healthcare costs and little to no wage increases", said Ways and Means Committee Chairman Richard E. Neal of MA.

"Today, we'll honor our promise to the hard-working men and women of the labor as we lift the Cadillac tax protecting health benefits that workers have negotiated", House Speaker Nancy Pelosi said Wednesday, according to The Washington Post.

The tax would have slapped a 40 percent levy on the value of health insurance plans above $11,200 for single coverage and $30,100 for family policies beginning in 2022. More than just health plan premiums are counted when determining the "cost" of the plan.

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The Senate has a similar bill with bipartisan support, but Senate Majority Leader Mitch McConnell, Kentucky Republican, has not yet said whether he will bring it for a vote.

The repeal also would mean that the Treasury Department won't collect the $201 billion the Joint Committee on Taxation estimated it would raise over a decade. "We hope Congress will repeal the device tax without delay". The tax "has a strong policy rationale: It will help slow health care cost growth" and would "discourage employers and employees from buying unusually high-cost health coverage that promotes the excess use of health care", wrote Paul N. Van de Water, a senior fellow at the nonprofit Center for Budget and Policy Priorities.

The measure to repeal it, H.R. 748, was passed under a fast-track procedure requiring two-thirds support among House members.

"The House action to repeal the Cadillac tax is welcome news for both employers and employees", said Brian Marcotte, president and CEO of the National Business Group on Health. "We urge the Senate to voice its own overwhelming support for this legislation and send it to the president for his signature". Politicians don't like the tax on health benefits, but almost every economist thinks the Cadillac tax or a similar measure is necessary to help slow the rise in health care costs and curb overuse of health services, he added.

Employers can reap large tax savings by compensating their employees in the form of more extensive health insurance, rather than wages, which are subject to payroll taxes. In their overhaul of the tax code in 2017, Congressional Republicans zeroed out the ACA tax penalty for those who did not purchase health insurance.

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