The House voted Wednesday to repeal Obamacare’s “Cadillac tax” on high-cost health insurance plans, doling out a win to labor unions and some employers while threatening to balloon deficits and remove a tool that economists favor as a way to control health spending.
Included to help fund the Affordable Care Act’s benefits, the 40% tax on generous employer-sponsored plans has been a delayed a number of times. On Wednesday, House members from both parties voted, 419 to 6, to scrap it outright, before it goes into effect in 2022.
Opponents said the tax would chip away at hard-won coverage and force workers to pay more out-of-pocket, as employers reeled in generous coverage to duck the fee.
“Passage of this bill will lift the shadow that overhangs employer-sponsored plans and stop the high-deductible problem from worsening,” said Rep. Joe Courtney, Connecticut Democrat and the bill’s sponsor.
Rep. Mike Kelly, Pennsylvania Republican, said passage proved that both parties could work together, despite ferocious spats over President Trump’s tweets targeting progressive lawmakers.
Congress has delayed its tax on health insurers, saying it causes premiums to rise, and put off a 2.3% excise on medical device sales, amid opposition from lawmakers in Minnesota, Massachusetts and other states with influential manufacturers.
The Obama White House and its economists prized the Cadillac tax on the cost of health coverage above $10,200 for an individual and roughly $30,000 for family coverage, saying the high-value plans end up paying for more care than needed, driving up health costs for everyone.
They also hoped that paring back generous health benefits would translate into wage increases.
Yet labor unions who initially backed the administration and its health law cried foul, arguing the tax would unfairly punish workers who negotiated generous health coverage in place of higher wages.
Three Democrats, two Republicans and one independent — Rep. Justin Amash of Michigan — voted against repeal.
Senate GOP leaders haven’t signaled whether they plan to take up the measure. It’s unclear whether President Trump would sign the bill, though he detests Obamacare and the White House has supported previous efforts to delay the tax.
Repeal of the Cadillac tax is estimated to cost $200 billion from 2022 to 2029 and another $1 trillion in the decade after that, according to the Committee for a Responsible Federal Budget, a watchdog group.
“We are reentering an era of trillion-dollar deficits, and Congress is considering yet another massive tax cut — it appears there is no end to this madness,” said CRFB President Maya MacGuineas.
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