Cadillac Tax … The Engine that Shouldn’t but Somehow Does

By Rick Bell

Oct. 28, 2015

Despite plenty of support backing its repeal, it looks like the controversial health care reform law’s so-called “Cadillac” tax will keep puttering right on along — possibly all the way to its implementation in 2018.

You can thank in part three conservative senators — presidential candidates Ted Cruz and Marco Rubio, as well as Mike Lee of Utah — who can’t accept “no” for an answer. The trio of GOP hardliners say if they can’t get the Affordable Care Act repealed in toto, they will refuse to entertain any legislation that could alter Obamacare.

Hoo boy. Damn the citizens and organizations employing them staring at a massive 40 percent excise tax that contains the real possibility of putting thousands of these companies out of business because we have an agenda not to fix, overhaul or reform Obamacare.

No, we want to end it. Destroy it. Crumple up those thousand pages of the ACA and toss it in the incinerator.

Yeah, that attitude should appeal to Main Street’s small-business owners and especially the charitable organizations that appear to be particularly vulnerable to the tax. Despite eking by on the slimmest of margins, charitable not-for-profits will be slammed by the excise tax at the highest for-profit corporate tax rate for offering health care to their employees.

The Last Word: Cadillac Tax Could Drive Business into a Wall

There’s a provision in a budget reconciliation bill that would repeal the 40 percent excise tax on premiums that exceed $10,200 for single overage and $27,500 for family coverage that is to begin in 2018, according to published reports.

Good. A good place to start, even though President Barack Obama — who early on admitted that the ACA isn’t perfect but is a good starting point — promises to veto any legislation that overturns the Cadillac tax. You’ve got many businesspeople and politicians galvanizing at polar opposites with the president over the tax. Ominously, consultancy Towers Watson & Co. projected that 48 percent of employers with at least 5,000 employees that offer health plans will be hit by the tax in 2018, with 82 percent affected by 2023.

Democratic Rep. Joe Courtney of Connecticut this week opined on the Huffington Post that the tax not only affects those with Cadillac plans, but also harms the health plans of other Americans including working families, retirees and older workers.

Said Courtney: “The tax is a blunt, indiscriminate instrument that must be repealed as soon as possible before it reduces access to necessary care, and damages the important progress we have made in reducing uninsured rates and intelligently bending the cost curve of health care spending.”

Right. Absolutely. Something needs to be done with it, and with hope this growing chorus will continue to pressure Congress and the administration into some sort of action.

But then you have Rubio, Cruz and Lee calling for the abolition of the entire law. Love the passion, fellas, but reality check: That just ain’t gonna happen.

Said the trio in a statement: “If this bill cannot be amended so that it fully repeals Obamacare pursuant to Senate rules, we cannot support this bill,” referring to the bill with the Cadillac tax repeal provision. It passed last week by the House of Representatives and now it’s the Senate’s turn.

If it’s the intention of Cruz, Rubio and Lee to dismantle Obamacare, what better and more influential place to start than by cutting the wires to the Cadillac tax? Symbolism has its place, but seeking the ACA’s abolition won’t keep the doors open along Main Street.

Rick Bell is Workforce’s editorial director. For comments or questions email

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