Wednesday, October 28, 2015

Huffington Post: Repeal the "Cadillac tax" to protect quality health benefits

Repeal the "Cadillac tax" to protect quality health benefits
Posted: 10/27/2015 5:22 pm EDT 
Since the Affordable Care Act became law in 2010, our nation has expanded health insurance coverage to millions of American families who previously lacked coverage. As a member of Congress, I gladly supported the law, which banned the practice of denying coverage to people with pre-existing conditions, closed the prescription drug 'donut hole' for seniors, and created subsidies for affordable coverage.
During the debate over this landmark law, economists advanced a controversial tax provision known as the "Cadillac tax," by billing it as a cost-containment strategy. The proposal would tax health insurance premiums over a set threshold, limiting health care spending by discouraging lavish health insurance plans enjoyed by the top one percent--CEOs and highly-paid executives. In reality, the tax will punish working families, older workers, and women--particularly those who live in more expensive regions of our country.
I am leading a bipartisan coalition of legislators, in partnership with an unprecedented breadth of allies in the business, labor, and health policy communities, to repeal this flawed section of the law--leaving intact the beneficial structure that has accomplished so much. .
In the five years since I initially led opposition to the Cadillac tax, the true impacts of this unfair provision on older workers, women, and families in high-cost regions have become clearer. Top actuarial firms including TowersWatson have concluded that these factors, not generosity of health benefits, play a much larger role in determining the cost of health insurance premiums.
Fundamentally, the tax on high-cost health plans will degrade the quality of insurance plans available to employees of all stripes--teachers, emergency personnel, factory workers, and a myriad of others who may have negotiated for better health insurance plans by forgoing wage increases in the past. More than 70 percent of employers polled recently confirmed that they were already seeking out alternative coverage options--lower quality plans with sharply higher out-of-pocket costs--to avoid incurring the tax in 2018.
Because the Cadillac tax will undercut benefits and punish employees who participate in FSA and HSA plans--those contributions count toward the threshold--patients will bear more up-front costs when they seek out medical care. That means more patients will forgo primary care, routine checkups, and treatment at the first signs of illness.
A new study from the National Bureau of Economic Research confirms that consumers faced with higher deductibles will seek less health care of all kinds, including medically necessary care. Doctors at Lawrence + Memorial Hospital in New London, Connecticut highlighted this challenge for patients during my recent visit to the Women's Health Center. They have seen a significant percentage of patients whose mammograms (which are cost-free under Affordable Care Act changes) detected potentially cancerous tumors fail to return for additional diagnostics, citing the costs associated with the testing. Clearly, the Affordable Care Act was intended to expand access to cancer screenings and preventive treatment for women--not to shift more patients to high-deductible plans that require greater out-of-pocket spending.
Since patients generally are not medical professionals--and the health care market is opaque to consumers seeking price information for particular services and treatments--they are ill equipped to determine the value of health care services. If the goal of the Cadillac tax is to reduce superfluous health care spending, as its proponents assert, then it will also reduce necessary health care spending, which leads to poorer outcomes for patients.
The Affordable Care Act has made great strides in rewarding health care providers for value, rather than quantity, of care. As a result, providers are seeking to contain costs while improving outcomes for patients. The Cadillac tax would disincentivize valuable care, as consumers are forced to decide whether or not to make a costly visit to the doctor. 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.

Friday, October 16, 2015

Fight the 40 Urges Congress to Repeal the Cadillac Tax

On October 15th, the Alliance to Fight the 40 urged Congress to repeal the 40% tax on health benefits and protect the health care that safeguards 175 million Americans. 

The Alliance to Fight the 40 is a broad-based coalition of employee and employer organizations representing or providing health coverage to Americans in every state. 

The Affordable Care Act imposes a 40% non-deductible tax (also called the “Cadillac tax”) on the cost of employer-sponsored health coverage that exceeds certain thresholds. This tax will impact a wide range of plans covering retirees, small businesses, self-employed individuals, state and local governments as well as non-profit organizations.

Numerous studies show that the 40% tax is forcing employers to shift costs to employees in order to avoid the tax. This increased cost-burden is falling hardest on those least able to afford it – lower-income, sicker and older workers. The increased cost burden for employees may jeopardize employees’ access to affordable care and therapies.

To date, 257 House members and 30 Senators have cosponsored legislation to repeal the 40% tax. Congress must act now to repeal the 40% tax, and protect employer-sponsored insurance coverage for millions of Americans.

Senate Letter: 
House Letter: 

For more information check out our website: or follow us on Twitter @fightthe40.

Wednesday, October 14, 2015

ICYMI: Letter to the Editor by Rep. Joe Courtney (D-CT) NYT: End ‘Cadillac’ Health Tax

The Opinion Pages | LETTER
End ‘Cadillac’ Health Tax
OCT. 14, 2015

To the Editor:

Re “Don’t Repeal the Cadillac Tax,” by Ezekiel J. Emanuel and Bob Kocher (Op-Ed, Oct. 2): Proponents of the so-called Cadillac tax cite its potential to curtail health spending and raise significant revenue as arguments to keep this provision in place.

In 2009 and 2010, it was billed as a tax on only the most expensive and lavish health plans, those enjoyed by high-paid chief executives. But the reality facing workers and employers today demonstrates that older workers, women and employees in high-cost regions will bear the brunt of this tax penalty.

The Affordable Care Act was intended to expand access to quality health insurance and care while controlling costs by rewarding value instead of quantity. By penalizing contributions to flexible spending accounts and on-site wellness clinics, and encouraging higher deductibles — which will deter patients from seeking preventive and primary care — the Cadillac tax undermines those goals.

Finally, the theoretical $91 billion in revenue generated by the Cadillac tax is a pipe dream. According to the Congressional Budget Office, three-quarters of that revenue would be generated through income and payroll taxes. I challenge Dr. Emanuel to find an average worker who believes the theory that employers would issue broad wage increases to compensate workers for reduced health benefits.

The Cadillac tax is bad policy that creates bad incentives in our health care system. That is why I am leading a bipartisan effort in the House to repeal the Cadillac tax before it damages the progress we have made since the Affordable Care Act was signed into law.

Vernon, Conn.

The writer, a Democrat, represents Connecticut’s Second District.

ICYMI: A ‘Cadillac’ Tax That Looks Like a Lemon | Commentary

A ‘Cadillac’ Tax That Looks Like a Lemon | Commentary

By James A. Klein and Terry O’Sullivan
The Affordable Care Act was passed with the intention of fixing several parts of our health care system: rising costs, growing ranks of uninsured and exclusions for pre-existing conditions. And now, a strong bipartisan group of congressional lawmakers is standing up to prevent unintended harm to employees’ health and health coverage.
Health reform was supposed to fix what was broken, not dismantle the employer-based health system that successfully covers more than 175 million Americans. As representatives of businesses and working people, we see the 40 percent “Cadillac tax” on health benefits as a serious attack on our shared future.
The term “Cadillac tax” falsely suggests it only affects plans with “excessive” benefits. In fact, it would hit plans that are expensive simply because they cover people with higher than average costs: women, older and disabled workers, and families experiencing catastrophic health events. That was not Congress’ intent when it passed the law.
Democrats and Republicans do not agree about much when it comes to the Affordable Care Act. But both Secretary Hillary Rodham Clinton and House Ways and Means Committee Chairman Paul D. Ryan have called for repeal of the Cadillac tax. The reason is simple: the tax is flawed both conceptually and in its construction. The cost point that triggers the tax is based on the Consumer Price Index. But Congressional Budget Office estimates show health costs will rise more than twice as fast as general inflation over the next decade. A Towers Watson survey found that 48 percent of employers expect at least one plan could trigger the tax in 2018, when it goes into effect, and fully 82 percent just five years later.
But by no means is this just a 2018 problem. The impact is being felt right now. Aon Hewitt reports that one-third of employers who have determined the impact of the tax are increasing out-of-pocket costs this year to avoid a trajectory that will trigger it in the future. Likewise, the CBO acknowledges employers will seek to avoid the tax by reducing benefits. Yet studies show that many patients forego needed care when faced with higher out-of-pocket costs. This is why further delay of this tax is not a solution; it must be repealed now.
The tax also fails to account for enormous variations in health costs. A study by Milliman found that geography had a potential 69.3 percent impact on premiums — noting that a health plan costing $9,189 annually in one part of the country could cost $15,556 elsewhere. Ironically, high value plans in lower cost locations avoid the tax, while lesser value plans in higher cost areas are subjected to it.
Analysis by Ernst & Young shockingly demonstrated that in certain high-cost states such as Georgia, Alaska, West Virginia and Wyoming, a silver-level plan in the small business exchanges will trigger the tax in 2018 or shortly thereafter. Clearly, Congress did not intend to tax plans paying 70 cents of every dollar in covered services — plans that the ACA expressly requires be offered to small employers.
Assumptions underlying the estimated $91 billion to be generated by the tax are also concerning. The CBO projects three-quarters will come from employers replacing health benefits with taxable wages. If the CBO is correct, working Americans will be asked to pay more. If the CBO is wrong, the revenue may never materialize and employees will lose valuable benefits without a corresponding increase in pay.
Rep.  Joe Courtney, D-Conn., has authored a bipartisan bill to repeal the tax. Along with a measure introduced by Rep. Frank C. Guinta, R-N.H., far more than a majority of House members have co-sponsored legislation to eliminate the tax. Momentum is building in the Senate, as well, as Sens. Dean Heller, R-Nev., and Martin Heinrich, D-N.M., recently introduced a companion to the Courtney bill, and Sen. Sherrod Brown, D-Ohio,  just released his repeal proposal. Both bills are joined by several cosponsors, so it is also a very bipartisan effort in the Senate.
How to improve the health system is the subject of continued debate. In the case of the “Cadillac tax,” Congress and the Obama administration can come together now in a bipartisan fashion to do what is right for working people and businesses and repeal the tax. They should act without delay.

James A. Klein is president of the American Benefits Council, whose member companies sponsor or administer health and retirement plans covering millions of Americans. Terry O’Sullivan is general president of the Laborers’ International Union of North America, representing a half-million members in the construction industry. Both groups are among the organizers of the Alliance to Fight the 40, a diverse coalition of public and private sector employers and labor unions.

Tuesday, October 13, 2015

WSJ: The 'Cadillac Tax' Makes Everyone Sick

The 'Cadillac Tax' Makes Everyone Sick
By Tevi Troy
13 October 2015
The Wall Street Journal

In apparent recognition of the distinct unpopularity of the Affordable Care Act's Cadillac tax -- an excise tax on high-value, employer-provided health benefits -- more than 100 economists have signed a letter defending it. As the Washington Post headline about the letter read: "101 Economists Just Signed a Love Letter to the Obamacare Provision Everyone Else Hates."

As of 2018, the excise will impose a 40% levy on employer-sponsored health plans whose value exceeds $12,500 for an individual and $27,500 for a family. The definition of value includes all benefits, such as wellness plans or employer contributions to flexible spending accounts, and the tax is intended to get employers to reduce the benefits these high-cost plans confer (and perhaps even to encourage employers to stop providing health care to employees so they migrate toward the ACA exchanges). Some 175 million Americans are enrolled in employer-sponsored health plans, and the tax will affect increasing numbers of plan holders. This is why the tax is so widely disliked, even before anyone is directly affected by it.

The Cadillac tax is so disliked that politicians and interest groups on both sides of the aisle want to get rid of it. 

There are few health-care issues that unite Hillary Clinton and Bernie Sanders with congressional Republicans, or unite unions with business, but opposition to the excise tax is one. Mrs. Clinton and Mr. Sanders have declared their opposition to the tax, while multiple congressional bills would eliminate it.

The reason the tax has so many opponents is its impact on American workers. It is going to force employers, who understandably do not want to pay the steep 40% levy, to reduce the benefits they offer in order to bring the costs of their plans below the ACA's value threshold.

Worse, because the thresholds at which the tax kicks in for individuals and families are indexed to overall inflation and not to faster-rising health-care costs, the tax will have a creeping impact on employees. Like the dreaded Alternative Minimum Tax, which was designed to hit fewer than 155 wealthy Americans in 1969 but now impacts 4.2 million households with incomes of $83,400 or more, the Cadillac tax will pull more and more Americans into its net.

According to a new study by the American Health Policy Institute, the excise tax is already forcing American employers to revisit the health care they provide to employees. Almost 90% of large employers surveyed by AHPI reported taking steps to prevent their company from having a plan that triggers the excise tax in 2018.

Nineteen percent of those surveyed -- top human-resource officers at companies with more than 1,000 employees -- said they were already curtailing or eliminating employee contributions to flexible-spending accounts to avoid triggering the tax. Nearly 13% were already curtailing or eliminating employee contributions to health savings accounts. Both FSAs and HSAs are popular ways for employees to cope with the increasing number of high-deductible health plans, as they allow workers to save for growing out-of-pocket health costs.

When employers respond to the tax by shrinking the value of employee health plans, that amounts to a reduction in the overall compensation package employees are getting. Supporters of the tax theorize that workers will get wage increases to offset the fact that their benefit package has been reduced. In reality, 71% of large employers surveyed by the American Health Policy Institute said they probably wouldn't increase wages to offset their reduction in health benefits. Among the 16% of employers who said they would increase wages, their workers are not necessarily better off: Unlike the lost benefits, wage increases will be subject to income tax.

Providing some kind of limit to the amount of the tax advantage employers get for providing health care to employees could make some sense if it were designed the right way -- for instance, by making some portion of employer-provided health benefits taxable above a certain income ceiling, without penalizing lower-wage employees. But the consistent unpopularity of the proposed excise tax and the bipartisan efforts to eliminate it reveal that American people of all incomes understand better than the 101 economists the costs of the Cadillac tax and the damage it would do.

Mr. Troy is the president of the American Health Policy Institute and a former deputy secretary of the Department of Health and Human Services in the George W. Bush administration.

Friday, October 9, 2015

Heller Fights to Repeal Cadillac Tax on Senate Floor

(Washington, DC) –Today, U.S. Senator Dean Heller (R-NV) spoke on the Senate floor, urging his colleagues to support his legislation to repeal the Affordable Care Acts (ACA)’s “Cadillac Tax,” which taxes high-cost health insurance plans. Click here or below to watch his speech.
“Fully repealing the Cadillac tax is an opportunity for Republicans and Democrats to join forces and work together, to repeal a bad tax for one purpose: Help 151 million workers keep the health insurance they like."
Remarks as prepared:
I rise today to share my concerns with the devastating impacts of the Cadillac tax, enacted as part of the Affordable Care Act.
The Cadillac Tax is a 40 percent excise tax set to take effect in 2018 on employer sponsored health insurance plans.
Mr. President, this is precisely why I have authored the only bipartisan piece of legislation to fully repeal this onerous tax.
In Nevada, 1.3 million workers who have employer-sponsored health insurance plans will be hit by the Cadillac tax.
These are public employees in Carson City, service industry workers on the Strip in Las Vegas, small business owners and retirees across the state.
Hardly anyone in Nevada will be shielded from the devastating effects of the Cadillac Tax.
Across America, 54 percent of employers and almost 151 million workers who currently enjoy employer sponsored health care benefits will see their benefits cut or their health costs go up. 
Given the devastating impact this tax will have on most of middle class America, I teamed up with Senator Heinrich from New Mexico to introduce, “the Middle Class Health Benefits Tax Repeal Act.” 
I am proud to say that our legislation has14 other co-sponsors and the support of over 75 organizations.
Some of these organizations include unions, chambers of commerce, small business owners, state and local government employees, and retirees – and they are all saying the same thing, “the Cadillac tax needs to be fully repealed or our employees will experience massive changes to their health care.”
We’re talking about reduced benefits, increased premiums, and higher deductibles.
Over 33 million Americans who use Flexible Spending Accounts (FSAs), and 13.5 million Americans who use Health Savings Accounts (HSAs) may see these accounts vanish in the coming years as companies scramble to avoid the law’s 40 percent tax.
HSAs and FSAs are used for things like hospital and maternity services, dental care, physical therapy, and access to mental health services. 
Access to these life-saving services could all be gone for tens of millions of Americans if the Cadillac tax is not fully repealed.
I have heard from employers, from big business to unions to small businesses, from all over Nevada saying they will inevitably have to eliminate services their workers currently enjoy, dramatically increase deductibles and premiums, and will have to cut certain health care providers out of their networks.
This goes at the heart of Obamacare’s broken promises, “If you like your health care you can keep it,” “If you like your doctor you can keep it.”
Earlier this week, I held a telephone town hall meeting with thousands of Nevadans from all walks of life.  During the meeting I asked the participants on the call: “Should the Cadillac tax be fully repealed?”
Almost 70 percent of them said, “Yes, the Cadillac tax should be fully repealed.”  Let me repeat that, almost 70 percent of them support repealing the Cadillac tax.
They see this as a burdensome and costly tax that will hurt hard-working Nevadans.
This onerous tax targets Americans who already have high quality health care.
No one claims that our health system ever was or is perfect.
The goal of health reform should be to help those who do not have health coverage, and lower costs for those who already have insurance.
This tax doesn’t achieve either of those goals.
It is very rare these days to see this much agreement in Washington.  Organized labor, chambers of commerce, local and state governments, and small business have come together with a bipartisan group of Senators putting forth a solution to fix a problem affecting so many hard working Americans and their families.
Some members on both sides of the aisle have tried to make this a partisan issue for different reasons.
This is not a partisan issue which is evident by the fact that companion legislation to my bill in the House enjoys more Democratic cosponsors than Republican. 
Fully repealing the Cadillac tax is an opportunity for Republicans and Democrats to join forces and work together, to repeal a bad tax for one purpose: Help 151 million workers keep the health insurance they like.
Thank you, Mr. President, I yield the floor (and if no one else is on the floor getting ready to speak, you must also say, “I suggest the absence of a quorum.”
In September, Senators Heller and Martin Heinrich (D-NM), introduced the Middle Class Health Benefits Tax Repeal Act, which fully repeals the ACA’s “Cadillac Tax.” The two Senators introduced this Senate companion to U.S. Congressman Joe Courtney’s (D-CT02) House legislation.  Beginning in 2018, the “Cadillac Tax” would tax employers whose health insurance plans cost more than $10,200 a year for individuals and $27,450 a year for families at 40 percent of the cost above those limits.

Thursday, October 8, 2015

New AHPI Study on the Cadillac Tax

The American Health Policy Institute today released their latest study on the health care excise tax, ACA Excise Tax: Cutting Family Budgets, Not Health Care Budgets, which reports a fresh analysis of employer trends in response to the excise tax. The study is based on results from the June 2015 health care survey, as well as the live survey that was conducted at WPC last month.

The new surveys found that the excise tax is already having, and will continue to have, a significant impact on employers and employees alike:
                    Almost 90 percent of large employers are taking steps to try to prevent their company from having a plan that triggers the excise tax in 2018;
                    Over 30 percent of large employers said they would have at least one plan impacted by the excise tax in 2018;
o   Almost half of the employers that did not have plans hitting the excise tax in 2018 said they would have a plan that would be impacted by 2023;
                    Almost 19 percent of large employers were already curtailing or eliminating employee contributions to flexible spending accounts (FSAs) in order to avoid triggering the excise tax;
                    Almost 13 percent were already curtailing or eliminating employee contributions to health savings accounts (HSAs); and
                    Among employers who are going to reduce the values of their plans as a result of the excise tax, 71 percent of employers said that they probably would not provide a corresponding wage increase; 16 percent said they would raise wages in response to benefit cuts.

The study was featured in Politico today:

MOST LARGE EMPLOYERS FEAR THE CADDY TAX - Two new surveys of employers, conducted by Tevi Troy's American Health Policy Institute, show that nearly 90 percent of large employers are trying to ensure they don't trigger the tax in 2018. Some 30 percent said at least one of their plans would be impacted in 2018 - and half of the remaining employers said they'd have a plan that would be affected by 2023. Over two-thirds of the employers that are going to reduce benefits because of the Cadillac tax said they wouldn't offer a corresponding wage increase."