by Mitch Kokai
Senior Political Analyst, John Locke Foundation
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.