Brown, D-Ohio, voted for the tax, which was tucked inside the 2010 law, known as the Affordable Care Act. Although the law has extended health coverage to 14 million of Americans previously without insurance, organized labor warns the tax would impact generous health plans they have negotiated with large companies.
“I worry that this tax will be part difficult on some working families,” Brown told reporters in a conference call Wednesday. “I want a real public policy discussion on how this would work.”
Brown and nine other Senate Democrats – including Sanders of Vermont — are co-sponsoring the bill to kill the tax. The measure includes a clause declaring that repealing the tax not increase the federal deficit.
Nicknamed the Cadillac tax and scheduled to go into effect in 2018, a 40 percent excise tax would be levied on plans for a single person costing more than $10,200 a year or on family plans costing more than $27,500 a year. The tax would be imposed on companies which self-insure their workers or insurance companies providing the plans.
The tax not only would raise $91 billion during the first decade, but health analysts say it would curb rising health costs by encouraging companies to offer less expensive plans.
“The tax would have a powerful impact on restraining health spending, but it would largely do so by shifting costs to the workers,” said Larry Levitt, senior vice president of the California-based Kaiser Family Foundation, a non-profit which focuses on health care research.
“There is an emerging consensus against the Cadillac tax plan, but there’s nothing approaching a consensus on how to replace the replace the revenues and constrain health spending,” Levitt said. “The death of the tax is a bit premature until there is agreement” on an alternative “to pay for it and control health care costs.”
A White House official speaking on condition of anonymity, said the “tax on high-cost employer plans is a key part of how the Affordable Care Act improves the affordability, accessibility and quality of health care while reducing the deficit.”
“We oppose legislation that would repeal the high-cost excise tax,” the official said. “Repealing this provision of the ACA would hurt our economy by increasing the deficit, raising health care cost growth, and cutting workers’ paychecks.”
Levitt said the Cadillac tax is the “the spinach in the law and there’s no reason to think people other than health economists and deficit hawks are going to like it much.”
Brown acknowledged Congress would “to replace the dollars” lost by killing the excise tax. A Brown aide said the Ohio Democrat “is open to many options so long as they do not undermine the health law,” suggesting tax revisions that would collect more tax dollars from hedge fund operators.
According to the Kaiser Family Foundation, if a family plan in 2018 cost $30,000, the company or the insurer providing the plan would have to pay a $2,500 tax.
“This is a tax no one really wants to pay or plans to pay,” Levitt said. “A much more likely scenario would be to pare back the benefits offered to workers in order to avoid paying the tax.”
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