Talk grows of repealing ObamaCare ‘Cadillac tax’

Top senators from both parties say they see momentum building to repeal the “Cadillac tax” on high-end health plans, though they still have major questions about how to pay for it and what the negotiations would look like.

“The conversation is very much alive, and I don’t know if it will be done this year or next year,” Sen. Dick Durbin (Ill.), the chamber’s No. 2 Democrat, said Tuesday.

{mosads}Democratic leaders in both chambers are pushing for changes to the tax, which has become the top concern of their labor union allies heading into the 2016 elections.

But any bill to repeal or change the tax would likely require Democrats to concede on other unpopular parts of ObamaCare, such as agreeing to the repeal of the medical device tax. Republican leaders — who would be reluctant to hand over a win to Democrats — have not yet said what they would ask for in return.

“All I can say is there is support on both sides to get rid of the Cadillac tax,” Senate Finance Committee Chairman Orrin Hatch (R-Utah) said Tuesday. “But the Democrats, of course, are the ones that hung us with it. Now that they’re finding that the unions are all upset about it, they want to change it.”

Several members, including the Senate’s No. 3 Republican, John Thune (S.D.), say Cadillac tax repeal could be part of a larger package with elements for both Republicans and Democrats.

“My guess is that, yeah, there’s always going to be a give-and-take and a lot of trade-offs and if there are things that Republicans get included in some of these bills the [Democrats] are probably going to want some of their things in there too,” Thune said.

The sticking point could be making up the revenue that would be lost from repealing the Cadillac tax, which amounts to about $87 billion over 10 years.

“You’re going to have to have offsets no matter what, probably, in this environment,” said Hatch, adding, “It’s a lot of money.”

Durbin argued, however, that changes to the tax might not need to be offset.

“Nobody has a clue” how to make up the $87 billion, Durbin said, though he added that Republicans don’t always stick to their guns about never adding to the deficit.

“The honest answer is you can find a lot of exceptions to the rule about the deficit,” Durbin said.  

The Cadillac tax is slated to take effect in 2018 for individuals with health insurance plans worth more than $10,200 a year or families with plans worth more than $27,500. Opponents of the tax, including labor and business groups, argue that the tax will affect less-generous plans and not just the “Cadillacs.”

One option for changing the tax would be increasing the threshold so that it applies to fewer plans.

The White House has cast doubt on a full repeal of the tax, though spokesman Josh Earnest said Monday that the administration is open to changes that would not harm the healthcare law overall.

Supporters of the tax, including the White House and several former Obama advisers, say it is an essential way to contain health costs.

But arguing for the tax on those grounds doesn’t appear to be winning over many Democrats.

Sen. Chris Murphy (D-Conn.), a leading champion of ObamaCare, has said a repeal of the tax would not harm the law as long as the revenue is found elsewhere.

“I’m down on the floor of the Senate defending the Affordable Care Act on a nearly weekly basis, but I’m very open to repealing the Cadillac tax or the medical device tax, so long as it doesn’t blow a hole in the program,” Murphy said.

“There are a lot of us who have no problem repealing the medical device tax so long as we fill that hole in the revenue,” Murphy added. “That becomes a hard conversation for Republicans.”