Union leaders laud house vote to repeal ‘Cadillac tax’ on health care plans

Workers polish the hood of a Cadillac SRX to prepare the car for an auto show in Leipzig, eastern Germany, April 15, 2004. The House of Representatives repealed the so-called "Cadillac tax" part of the ACA which had hit many union members. | Eckehard Schulz / AP

WASHINGTON—Union leaders, notably Laborers President Terry O’Sullivan, lauded the bipartisan and overwhelming U.S. House vote to permanently repeal the so-called “Cadillac tax” on high-cost high-value health insurance plans.

The 419-6 vote on the repeal (HR748) on July 17 sent the measure to the GOP-run Senate, where O’Sullivan urged senators to swiftly agree. He said the Cadillac tax would hit everyone private health insurance now covers.

The 40% tax on value of an individual’s or family’s health care plan, above minimums of $10,200 for an individual and $27,500 for a family, had been delayed for three years. Unions and hundreds of other groups said it would hit their members especially hard.

The tax, part of the Affordable Care Act, was supposed to prompt market-driven decisions by consumers on health care, but economic analysts pointed out it would lead to declines in coverage instead. During the House debate, Majority Leader Steny Hoyer, D-Md., admitted that.

Hoyer added the nation is achieving the ACA’s health care “savings” the tax would have prompted, but in different ways.

“This tax, contrary to the popular notion that it would impact only high-value plans, will eventually impact all 181 million Americans who rely on their employer-sponsored insurance for themselves and their families,” O’Sullivan explained.

“Without full repeal, it will be the workers who will ultimately pay for this regressive tax. Already families are seeing higher costs with fewer benefits as employers are having to adjust coverage due to this tax despite its delayed implementation to 2022.”

The Laborers want senators to “act quickly to finally, fully repeal the Cadillac tax,” he added. The Laborers, the Carpenters, and Ohio’s pension system for public workers are part of a “Fight the 40” coalition which has marshalled the campaign for Cadillac tax repeal.

The Cadillac tax “will adversely affect workers and employers in all fully insured health plans,” Roofers President Kinsey Robinson predicted when the House in 2014 debated delaying it.

“This egregious tax is estimated by the Joint Committee on Taxation to cost over $100 billion over 10 years, and this burden falls mostly on small and mid-sized businesses and their workers. One private study estimates this tax could drive up health insurance premiums by over $5,000 for a family of four during the next decade,” Robinson said.

The non-partisan Congressional Budget Office reported the tax would have an uneven impact if it took effect: Workers with identical health plans would escape the tax if they live in low-cost areas—CBO used Huntington, W. Va., as an example—but not in high-cost ones, such as San Francisco.

“Although the excise tax is often referred to as a tax on overgenerous health benefits, it is likely to be a tax based on factors other than benefit richness and beyond the control of plan members,” CBO said. “Instead, factors such as age, gender, geography, industry, and plan size have much greater effects on the cost of a plan than any perceived generosity in the plan’s benefit structure.”

Though he supported repealing the Cadillac tax, Hoyer warned the GOP that congressional Democrats would continue to defend, and try to improve, the ACA. During the last eight years, when they ran the U.S. House, the GOP staged, and won, 62 party-line votes to repeal the 2010 law.

Republicans always voiced a “repeal and replace” mantra, but never offered a replacement, and never wanted to. They wanted to throw workers, families, and consumers back on the mercy, or lack of it, of the health insurers. The one Senate repeal attempt lost, 50-49, when the late Sen. John McCain, R-Ariz., suffering from incurable brain cancer, flew back to D.C. to turn thumbs down.

“New economic evidence suggests this tax on high-cost insurance plans is more likely to shift health costs to working families who are covered under employer-based plans than to slow the growth in overall health care costs any further,” Hoyer explained.

“As a result, there is now a strong case for repealing” the Cadillac tax. “Democrats will always defend the ACA and its reforms,’ including “a commitment to working in a bipartisan way to assess which parts of the law are working best and which ones need to be changed and improved.”

“While Republicans remain hell-bent on dismantling the ACA in its entirety, whether by legislation, lawsuit, or executive sabotage, Democrats will continue working to strengthen the law so that it can bring costs down, protect Americans’ access to affordable coverage, and improve outcomes for patients.”

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CONTRIBUTOR

Mark Gruenberg

Award-winning journalist Mark Gruenberg is head of the Washington, D.C., bureau of People's World. He is also the editor of the union news service Press Associates Inc. (PAI). Known for his reporting skills, sharp wit, and voluminous knowledge of history, Mark is a compassionate interviewer but tough when going after big corporations and their billionaire owners.