Congress is preparing to repeal three major health industry taxes meant to fund the Affordable Care Act in the year-end spending bill, dealing a significant blow to Obamacare’s funding mechanisms.
While congressional leaders are still hammering out the details of the spending bill, lawmakers have reportedly agreed to scrap the 40 percent Cadillac tax on high end employer plans, the 2.3 percent medical device tax, and an additional health insurance tax.
The repeal of the taxes, which were mandated by the Obama administration’s Affordable Care Act, constitutes a win for the health insurance industry and a severe funding problem for Obamacare. The Cadillac tax repeal is expected to cost nearly $200 billion over 10 years, while the repeals of the other two taxes are projected to cost between $15 billion and $25 billion each over the same period.
Congress prevented the Cadillac tax, which drew strong opposition from employers and unions with expensive health benefits plans, from taking effect until 2022, and the House voted over the summer to abandon it permanently. The medical device and health insurance taxes have been enforced on and off since the Affordable Care Act was passed.
The text of the $1.4 trillion spending bill is expected to be released Monday, and the package is expected to pass both the House and Senate this week.
Some Senate Democrats, including Senate Minority Leader Chuck Schumer and Senator Pat Leahy have opposed the Cadillac tax since the Obama years,
“This tax unfortunately would target far too many health plans and place far too great a burden on working families,” Leahy said in 2015. “We must find a way to contain the cost of health care without creating geographic disparities and limiting the benefits available in health plans.”