According to the Alliance to Fight the 40 | Don’t Tax My Health Care, a coalition of businesses, patient advocates, employer organizations, unions, local governments, health care companies, consumer groups and other stakeholders that support employer-sponsored health coverage, the tax will affect a greater number of Americans, and sooner, because the new tax bill changes the way the tax is imposed.
Originally imposed by the Affordable Care Act and set to take effect in 2018, the Cadillac Tax hits employers with a 40 percent tax for each person covered by an expensive health care plan—or, as former President Obama described it some years back, “really fancy plans that end up driving up costs.”
The soaring cost of health insurance coupled with the change imposed by the new tax law, means that many more people will suddenly find themselves subject to the tax—and employers could start cutting back on the health care plans they offer to employees to avoid being on the hook for the tax, or at the very least shifting even more of the cost of those plans to employees who may already be having a hard time keeping up with premiums.
The Tax Cuts and Jobs Act changes the way the threshold amounts will be calculated that determine whether a plan is subject to the tax. It will now use the chained Consumer Price Index instead of the conventional CPI, which, according to the Alliance, “means the thresholds will be increased at a much slower rate. This will subject more Americans to the ‘Cadillac Tax’ sooner because health care inflation will outpace any increase in the thresholds using the new ‘chained CPI.’”
According to the Alliance, “More than 178 million Americans depend on employer-provided health insurance. The only way for employers to escape the looming ‘Cadillac Tax’ is to reduce coverage and shift additional costs to workers.”
A bipartisan effort in both houses of Congress is underway to repeal the tax, led in the House by representatives Joe Courtney, D-CT, and Mike Kelly, R-PA; in the Senate, Dean Heller, R-NV, and Martin Heinrich, D-NM, are taking point.
In a statement, Heller points out how far from “Cadillac” plans the new law will reach. “In Nevada, more than one million workers who have employer-sponsored health insurance plans will be hit by the Cadillac tax. These are public employees in Carson City, service industry workers on the Strip in Las Vegas, small business owners and retirees across the state.”
Heinrich says in a statement, “There is bipartisan support for this effort and I hope that in the New Year we can work together to repeal this tax that would negatively impact millions of Americans across the United States who rely on employer-provided health plans.”