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Repeal of health reform's Cadillac tax gains bipartisan support

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Once given little, if any, chance of passage, legislation to repeal the health care reform law's “Cadillac” tax on costly health plans continues to gather more support from lawmakers on all sides of the political aisle.

Last week, 11 Senate Democrats, including veteran lawmakers Sens. Pat Leahy, D-Vt., and Charles Schumer, D-N.Y., as well as Vermont independent senator and presidential candidate Bernie Sanders, backed legislation — S. 2075 — to repeal the Patient Protection and Affordable Care Act excise tax mandate.

In addition, on Tuesday, Democratic presidential candidate Hillary Clinton called on lawmakers to repeal the tax. “I encourage Congress to repeal the so-called Cadillac tax,” Ms. Clinton said in a statement.

Starting in 2018, that ACA provision will impose a 40% excise tax on the portion of health care premiums that exceed $10,200 for single coverage and $27,500 for family coverage. The provision is projected to raise $87 billion in new revenues from 2018 through 2025, according to a Congressional Budget Office report.

Over in the House of Representatives, the Ways and Means Committee on Tuesday voted to kill the excise tax as part of a bill that now will move to the House Budget Committee for inclusion in a future, broader budget reconciliation measure that lawmakers will later consider. Budget reconciliation measures often have included employee benefit-related provisions, with the best example being a 1986 law with a provision — often simply known as COBRA — requiring employers to continue health care coverage to employees who quit or were let go, and to employees' spouses in death, divorce and marital separation situations.

In addition, other stand-alone excise tax repeal measures, including those introduced by Reps. Joe Courtney, D-Conn., and Frank Guinta, R-N.H., enjoy widespread support.

“We are happy that Democrats and Republicans alike recognize the dangers associated with penalizing employer-provided health care,” said Annette Guarisco Fildes, president and CEO of the ERISA Industry Committee in Washington.

Bipartisan support for repeal of the excise tax is growing as lawmakers have come to recognize, through lobbying by various interest groups, the widespread impact the tax will have, said Steve Wojcik, vice president of public policy at the National Business Group on Health in Washington.

Indeed, a wide array of business groups, labor organizations and others have pressed home to lawmakers what they say is the unfairness of the tax.

“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,” said James Klein, president of the American Benefits Council in Washington and a member of the Alliance to Fight the 40, a rapidly growing lobbying group that is working to convince lawmakers to repeal the tax.

With more lawmakers agreeing with those points, “the chances for repeal of the excise tax are growing,” NBGH's Mr. Wojcik said.