April 29, 2015  

Yesterday Congresswoman Dina Titus (NV-1) and Congressman Joe Courtney (CT-2) held a press conference to announce new legislation that would repeal the excise tax on high-cost health insurance plans scheduled to go into effect in 2018. Also known as the “Cadillac tax,” the policy would apply a 40 percent tax on health insurance expenditures over $10,200 per person and $27,500 per family. The excise tax was established in a later version of the Affordable Care Act, but its scheduled implementation was delayed five years by an effort led by Courtney and Titus with 190 House colleagues in 2010. Studies of the policy have indicated that it will have a disproportionate and rapidly increasing impact on older workers, women, and workers in high-cost regions.

“The so-called ‘Cadillac Tax’ will adversely impact businesses and middle class families across the Las Vegas Valley. Unless we start taking steps to repeal this excise tax, many families will be wrongly forced to bear an unfair burden as companies either shift the costs to their employees or reduce the value of their health benefits,” said Rep. Dina Titus (NV-01), an original cosponsor of HR 2050. “That’s why I’m proud to join Rep. Courtney in introducing the Middle Class Health Benefits Tax Repeal Act to ensure Nevadan families continue to receive quality, affordable employer-sponsored health coverage.”

“The excise tax is a poorly designed penalty that will put a dent in the pocketbooks of many families and businesses with health insurance plans that do not resemble the 'Cadillac' plans originally targeted when this policy was adopted—instead, the excise tax will punish people living in higher cost areas, with 'Ford Focus' level plans,” Courtney said.

“The Affordable Care Act has already made great strides in controlling the growth in health care costs--the supposed aim of the excise tax provision--through smart reforms in payment models, and emphasizing prevention, cancer screenings, and wellness checkups. The excise tax is not a smart reform--it is a flawed, one-size-fits-all penalty that will degrade workers' benefits, lead employers to choose less comprehensive plans, and force families to pay more out-of-pocket health care costs," Courtney said. "Fortunately, we have the opportunity to eliminate this tax before it goes into effect, and I am proposing this legislation to ensure that America's working families are protected from an uneven, unnecessary cut to their hard-earned health care benefits.”

At a staff briefing last month organized by Congressman Courtney, economists and actuaries from the Economic Policy Institute, TowersWatson and Milliman, the consulting firm, projected that the tax would unfairly impact older workers, women, and—most disproportionately—workers living in high-cost areas, including the Northeast. A recent Milliman study reported that nearly 70 percent of variance in health insurance premiums is explained by geographic location, while just six percent of variance is due to the comprehensiveness of the benefits. Since the excise tax is determined solely by premium cost—not the quality or “richness” of a plan’s benefits—it will unfairly impact older workers, women, and people who live in areas where health care costs are high.

“We support this bill because it would help counties continue to offer competitive health benefits to employees who serve more than 300 million county residents nationwide,” said Berks County, Pa. Commissioner Christian Leinbach, Northeast regional representative for the National Association of Counties (NACo).  “Not only would the excise tax hinder our efforts to attract and retain top-notch employees, but it would also have significant impacts on county budgets and impose additional burdens on taxpayers.  Counties thank Congressman Courtney and his colleagues for introducing this bipartisan legislation.”

Executive Secretary-Treasurer of the Connecticut AFL-CIO, Lori Pelletier, said, “This bill will improve the Affordable Care Act by helping to keep health care affordable for all working families with employer-based coverage. We applaud Congressman Courtney for introducing this important legislation.”

James A. Klein, President, American Benefits Council, said, “Unless repealed, this ‘Cadillac tax’ will eventually apply to every health plan vehicle on the road, especially damaging plans with large numbers of women, older workers and families living in areas where health services are expensive.”

In a letter supporting the bill, Joseph F. Brennan, President, Connecticut Business & Industry Association, wrote:  “CBIA represents thousands of employers of all sizes in Connecticut. The cost of healthcare remains one of the biggest challenges facing companies across the state. The specter of the excise tax only adds to the difficulty in providing affordable, comprehensive health benefits to their employees… The lack of predictability is particularly vexing for employers as they try to manage their health benefit plans. That’s why it is critical to repeal the tax now, before it causes any more disruption in the healthcare marketplace.”