Obamacare’s “Cadillac” tax on high-cost health plans is getting a lot of heat, and not just from Republicans. More Democrats, including presidential candidates Hillary Clinton and Bernie Sanders, want the tax repealed.
But a group of 101 economists and analysts are making a case for the tax, saying that repealing it would add $91 billion to the federal budget deficit over the next decade.
“The Cadillac tax will help curtail the growth of private health insurance premiums by encouraging employers to limit the costs of plans to the tax-free amount,” reads the letter released Thursday and sent to committee leaders in the House and Senate.
The tax got its nickname because it targets high-cost health plans, issuing a 40 percent excise tax starting next year for plans that go past a certain cost threshold.
The economists from think tanks such as the Brookings Institution and Urban Institute and prominent universities such as Yale and Stanford, said the tax is useful. Among the economists is Jonathan Gruber, an architect of the law who recently got in trouble for calling American voters stupid.
“As employers redesign health insurance plans to hold costs within the tax-free amount, cash wages or other fringe benefits will increase,” the letter says.
It’s not clear whether the letter will have any impact on the political drumbeat against the tax. Lawmakers have heard from businesses that they need to act on any repeal soon since the tax goes into effect next year.
While it isn’t uncommon for Republicans to be against a tax that is part of Obamacare, repeal is receiving a lot of bipartisan support.
A primary reason appears to be that labor unions, a key Democratic constituency, absolutely hate the tax. It could hit the high-cost health plans often negotiated in labor agreements.
