At least one part of Obamacare is likely doomed once a new president enters the White House in a little more than a year from now.
Popularly known as the "Cadillac tax," it puts a 40 percent excise tax on the most expensive healthcare plans that employers offer their workers, starting in 2018. Opposition to it is steadily building, making it appear more likely that whoever wins the presidency, whether Democrat or Republican, will take steps to repeal it.
Republicans seeking the presidential nomination uniformly oppose it. So do their Democratic counterparts, including Hillary Clinton and Sen. Bernie Sanders, I-Vt. Both parties have base voters who despise it, with both the Chamber of Commerce and major labor unions lobbying hard to get it killed.
"The chances are that no matter who is the next president, we'll see some changes," said Tevi Troy, president of the American Health Policy Institute. "I don't want to say anything's inevitable, but I think there's a good chance given the bipartisan opposition."
Supporters of the tax, including many health policy experts, argue that the tax is one of the few big levers in President Obama's Affordable Care Act designed to temper healthcare spending in the U.S., which still spends more per person on healthcare than any other developed country.
The tax creates incentives for employers to offer less-generous health insurance plans that fall below the threshold at which the Cadillac tax kicks in. The threshold is $10,022 per year for an individual and $27,500 for a family, including not just spending on the monthly premium but on other costs as well, including any contributions made to a health savings account or a flexible spending account.
It also levels a playing field, some policy experts argue, that has long favored higher-income Americans who are more likely to hold jobs where they are offered benefits such as health insurance. For decades, employers have enjoyed a tax exclusion on the health insurance they offer their workers, making it much more expensive for people who have to buy coverage on their own.
That exclusion, says the American Enterprise Institute's Joe Antos, made it a lot easier for employers to offer generous health benefits that sheltered employees from the costs of their care and encouraged wasteful use of it.
"We're talking about a tax break that has been in place since the 1940s," Antos said. "That has really been one of the most important engines driving up health insurance from something where you actually had to pay something to go to the doctor to coverage that looked free. We had people saying OK to 5,000 blood tests that were largely irrelevant."
But on the flip side, several analyses of the tax have concluded it would affect a large number of employers. One in four employers that offer health benefits would be subject to the levy, according to an August report by the Kaiser Family Foundation. Employers are already taking steps to pare down their health benefits, in anticipation of the tax.
Labor unions are frustrated that the Cadillac tax could diminish the generous health benefits they negotiate through collective-bargaining agreements. On the other side of the political aisle, the U.S. Chamber of Commerce is also firmly opposed to the tax, noting that employers can't dodge it simply by shifting more costs to workers.
"The Affordable Care Act purported to build on the employer-sponsored [insurance] system, and this is really going to undermine the employer-sponsored system and it's going to curb the ability of employers to innovate," said Katie Mahoney, the chamber's executive director of public policy.
More than half of all House members, about 240, have signed onto bipartisan bills to repeal the Cadillac tax. Yet many political experts say Obama has little reason to agree to get rid of part of his healthcare law as he prepares to leave office next year.
When Congress included the tax in the Affordable Care Act, it was meant to help pay for the law, allowing the Congressional Budget Office to determine that the legislation as a whole reduces the federal deficit. The budget office now says the tax will bring in about $87 billion over the next decade, a number that has been scaled back 41 percent from an earlier projection.
A big challenge with repealing the tax would be finding a way to make up the lost revenue. The Bipartisan Policy Center has suggested replacing the tax with a different kind of policy that would remove the highest-cost health plans from the employer exclusion, thus imposing full taxation on those plans for the first time in decades.
That approach would raise revenue and keep incentives in place for employers to reduce spending, says the center's senior vice president, Bill Hoagland.
But whatever lawmakers end up doing, it's more likely the Cadillac tax will meet its demise — or at least undergo some big changes — than remain in place, most experts agree. When lawmakers passed the tax, they knew it would be deeply unpopular, Hoagland said.
"I think it was put in place thinking that it would be modified, altered or even repealed before it even went into place," he said. "I've always thought the 2018 date was a hoax."
This article appears in the Oct. 13 edition of the Washington Examiner magazine.