Democrats Attempting To End Obamacare Cadillac Tax Before It Starts

Democrats Attempting To End Obamacare Cadillac Tax Before It Starts

Nancy Pelosi once said we had to pass Obamacare to find out what was in it. Well, now we know, and now it is reported that she and Harry Reid are trying, quietly, to get the so-called “Cadillac” tax repealed before it even takes effect in 2018.

Harry Reid and Nancy Pelosi, champions of Obamacare
Harry Reid and Nancy Pelosi, champions of Obamacare
And what is driving Reid and Pelosi’s effort to get rid of this tax? Why, the unions.

Powerful labor groups such as the AFL-CIO and the American Federation of Teachers vehemently opposed the Cadillac tax from the start. They say repeal needs to happen soon, before employers begin trimming back healthcare benefits.

The unions realized that they were going to get hit hard by a levy on high-end insurance plans, the same kind of plans that are routinely part of union compensation packages and get haggled over during negotiations. However, this tax is a huge part of the Obamacare payment plan.

Formally known as the high-cost plan tax, the provision is a 40 percent excise on the cost of health care coverage above $10,200 for an individual and $27,500 for a family, although those amounts could change when the government issues final regulations for 2018 and as it indexes the thresholds for inflation in later years.

The tax is expected to collect a staggering $87 billion from 2016 through 2025.

The health care law requires the “coverage provider” to pay the tax. That means insurers pay for fully covered plans and the employers themselves for self-insured plans.

“As a practical matter, the insurer will try to get the employer to pay the tax, and the employer will try to pass it on to employees,” said Timothy Jost, a law professor at Washington and Lee University who closely tracks the health care law. “Moreover, employers are likely to eliminate benefits that would be subject to the tax, most likely by increasing employee cost sharing, which is essentially shifting costs to employees.”

Of course, conservatives have been pointing out all along that there was no way that the Cadillac tax could survive – at least, if the Democrats wanted to have political viability. Even Hillary Clinton wants the Cadillac tax gone. The problem is, once you undo the Cadillac tax, there is a funding hole in the Obamacare dog-and-pony show that still has to be filled, to the tune of billions. There are now record numbers of people on Medicaid, at some point the books can no longer be cooked to make the figures balance.

Kevin Williamson of National Review argues that conservatives should just sit this one out and let the unions reap what they have sown. The trouble with that, of course, is that the GOP wants to get rid of this tax anyway, and sitting it out is bad optics. However, the person really standing in Reid and Pelosi’s way is Obama himself. He is no longer indebted to the unions, and with Hillary Clinton as the de facto Democrat nominee, he feels no pressure to do her any favors. He is quite content to let the sh** hit the fan in 2018 and leave yet another thing for the next president to deal with.

And if it wasn’t such a painful issue, it would be amusing to watch Reid and Pelosi try to clean up this mess that got left on the carpet before anyone notices. Too bad everyone who actually pays for their own insurance already noticed the stench.

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1 Comment
  • Rebecca says:

    Seems like a good opening for the GOP to negotiate federal funding of PP. Which liberal constituency has more power? Pass the popcorn.

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