Health Care

ObamaCare fear after tax freeze

ObamaCare advocates are growing fearful that several key taxes frozen in Wednesday’s budget deal will never go into effect.

The pair of budget deals negotiated by congressional leaders would halt or delay three ObamaCare taxes, forcing the president to make his biggest concession yet since his healthcare law was passed.

{mosads}Hours after the deal was announced, White House spokesman Josh Earnest downplayed the biggest change — a delay of the “Cadillac tax” — as “minimal.” But supporters of the law say they’re worried that the delay of these taxes, until after Obama leaves office, will ultimately lead to their demise.

“The fear for advocates of the tax is that once Congress starts delaying it, it won’t last,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation and former Clinton administration health adviser.

Most significantly, the legislation would again push back the Cadillac tax on employer healthcare benefits — a measure at the center of the Obama administration’s efforts to contain healthcare costs.

In total, those changes would take a $35 billion bite out of the law’s revenue stream, according to analyses released by congressional budget scorekeepers on Wednesday.

If the changes to the law are made permanent, it would undermine a key argument for the cost-saving measures in the law. It could also mean that the Affordable Care Act ends up costing taxpayers money.

“If those actually end up as repeals, all the sudden the law that was scheduled to save money in the first decade would cost money in the first decade,” said Loren Adler, research director for the Committee for a Responsible Federal Budget.

“That would flip the sign on the wall, which could be a big thing,” he said.

Alone, the three tax changes would have a small effect on the law, which is projected to save $200 billion over 20 years.

If just the health insurance and medical tax are repealed, multiple healthcare experts said it wouldn’t have any meaningful effect on the healthcare law. The biggest losers would be deficit hawks.

But the delay of the Cadillac tax is different, experts say.

The two-year delay of the Cadillac tax represents the most significant — and costliest — change to the law. Congressional scorekeepers said Wednesday it would cost nearly $20 billion.

The tax has been hailed as a powerful force for controlling health spending. Jason Furman, Obama’s chief economist, delivered an impassioned defense of the tax as recently as Monday, calling it an important piece of the president’s healthcare legacy.

Some opponents of the Cadillac tax had long believed that the Obama administration would ultimately have to nix the tax after officials struck a deal to delay it in 2010.

Five years later, and under growing pressure from union groups, the administration again agreed to punt.

“There’s been an assumption that Cadillac tax can control costs through magic and as we got closer to its effective date, some of the consequences for worker health benefits have become apparent,” Levitt, the former Clinton health adviser, said. “Anytime you try to control healthcare costs there are tradeoffs.”

Still, some healthcare experts argue it will be tougher to repeal the tax, even with a new president.

“I don’t see the tax getting repealed in full,” said Dan Mendelson, CEO of the healthcare consulting firm Avalere Health.

“Everyone hates taxes, OK, so it is really easy to be against the tax, and it’s easy especially to be against the tax that potentially hurts people who have illness. It’s problematic. But it’s a fiscal reality that repealing a tax is very hard to do,” he added.


Tags Barack Obama Josh Earnest ObamaCare Omnibus spending bill

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