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More Democrats get on board against Cadillac tax

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Legislation to repeal the health care reform law’s Cadillac tax on costly plans is, for the first time, picking up broad support from Senate Democrats.

On Thursday, 11 Senate Democrats, including such veteran lawmakers as Sens. Charles Schumer, D-N.Y., and Pat Leahy, D-Vt., along with Vermont independent senator and presidential candidate Bernie Sanders, cosponsored legislation, S. 2075, that would repeal the reform law provision which, starting in 2018, will impose a 40% excise tax on the portion of health plan premiums exceeding $10,200 for single coverage and $27,500 for family coverage.

The impact of that provision, unless repealed, will be widespread.

An earlier analysis by benefit consultant Towers Watson & Co. projected that 48% of employers with at least 5,000 employees that offer health plans could be hit by the excise tax in 2018, with 82% affected by 2023.

“This tax unfortunately would target far too many health plans and place far too great a burden on working families,” Sen. Leahy said in a statement “We must find a way to contain the cost of health care without creating geographic disparities and limiting the benefits available in health plans,” he added.

“This tax does not only hit 'Cadillac' plans. It also hits ordinary plans that are expensive for all the right reasons — they cover older and disabled workers and families with catastrophic health events. The tax must be repealed to preserve vital protection for these vulnerable populations,” said James Klein, president of the American Benefits Coalition in Washington and a member of a diverse coalition — The Alliance to Fight the 40 — lobbying to repeal the tax.

Several repeal bills earlier were introduced with one, H.R. 2050, sponsored in the House of Representatives by Rep. Joe Courtney, D-Conn., now with more than 150 House co-sponsors.

The newest repeal bill, unlike similar measures, also includes a “sense of the Senate” provision that any revenue loss resulting from repeal of the excise tax should be offset.

Earlier, the Congressional Budget Office estimated that an excise tax repeal would cost the government $87 billion in lost revenues from 2018 to 2015.

That estimate, which is based on the assumption that employers cutting health benefits to stay under the excise tax trigger would boost employees' taxable pay. Numerous employer groups say that assumption has little or no basis.