Republicans and Democrats came together Wednesday to perform an act rarely seen on Capitol Hill: voting to repeal part of Obamacare.
The legislation, the Middle Class Health Benefits Tax Repeal Act, passed easily via a procedural process meant to expedite uncontroversial legislation. Only six lawmakers voted against it. The bill gutted the Obamacare “Cadillac Tax,” which is a 40% excise tax on health insurance coverage deemed overly generous.
The “Cadillac Tax” was once seen as integral to funding the healthcare law but is now widely viewed by lawmakers as a penalty on the middle class.
With the support of health economists, it was created to discourage higher-cost, more robust health insurance plans. Supporters argued such plans would otherwise encourage people to use medical care they don’t really need, driving up costs and overall healthcare spending.
Increasingly, however, a large swath of middle-class workers have plans that would be considered overly generous under the rules Obamacare laid out. This occurred because, as healthcare prices have continued to rise, so have healthcare premiums for employer plans.
If the provision remains in law, then employer health insurance that costs more than $10,200 for an individual and $25,500 for a family would get dinged by the “Cadillac Tax.”
An analysis from the Kaiser Family Foundation found that roughly a fifth of employers who offer healthcare coverage would be affected when the tax is expected to go into effect in 2022. If that were to happen, employers would be expected to cut benefits or shift costs onto middle-income workers, such as teachers and nurses.
Nixing the tax will cost the federal government $193 billion over a decade, according to Congressional Budget Office projections.
This isn’t the first time that lawmakers have come together over the “Cadillac Tax.” The tax was intended to go into effect in 2018, but was delayed. It was delayed again to 2022 as part of a spending bill passed in 2018. During the 2016 election, both Hillary Clinton and Bernie Sanders called to repeal the tax.
The future of the legislation hasn’t yet been set in the upper chamber. The Senate bill, introduced by Democrat Martin Heinrich of New Mexico, has 42 co-sponsors.
