Cadillac Tax Repeal Unlikely in 2017, Economists Say

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By Alex Ruoff

Oct. 18 — Congress is unlikely to repeal the Cadillac tax on high-cost health plans next year, a panel of health economists said Oct. 18.

Republicans and Democrats agree the tax on more-expensive health plans offered by employers should be lifted, but disagree on how to replace the funds it will bring in. As a result, Congress is expected to debate lifting the tax but is unlikely to pass legislation to do so, Robert Reischauer, president emeritus of the Urban Institute, said.

“We shouldn’t hold out great expectations for any significant change,” Reischauer said during a forum on health policy hosted by the National Coalition on Health Care.

The Cadillac tax, a 40 percent excise tax on health plans that exceed a certain value threshold set to begin in 2020, is key in financing the Affordable Care Act’s insurance coverage expansions. It was intended to slow the rise of health-care costs by putting pressure on employers to limit their benefits and push for lower prices from hospitals and doctors.

However, the tax has garnered opposition from groups across the political spectrum, including large employers, labor unions and insurers.

Debating Repeal

House Republicans and Democratic presidential nominee Hillary Clinton both support repealing the Cadillac tax, according to Bloomberg Intelligence analyst Brian Rye.

House Speaker Paul Ryan’s (R-Wis.) health agenda would discourage companies from providing high-cost health care by limiting the tax exclusion on employer-provided health benefits, Douglas Holtz-Eakin, president of the center-right American Action Forum and former director of the Congressional Budget Office, said. This change would also push companies to substitute some benefits for higher pay, he said.

If Clinton becomes president a repeal of the tax could be included as part of a larger tax reform package, Rye said. But, with more than three years until it takes effect, there’s little urgency for Congress to act, he said.

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

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