Has the budget package totaled the Cadillac tax?
Skip to main content
MDHC_Logotype_white
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • This Week's News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • People
    • Regional News
    • Digital Edition
    • Joe Biden
      Revamp of the nation's vaccination effort may not be enough
      A man in a room with servers.
      Momentum grows to outsource hospital tech functions in 2021
      Firefighter walking towards forest fire.
      Wildfires producing more harmful pollution
      Dr. Bruce Siegel
      By protecting the healthcare safety net, Biden can put us on the path to a stronger country
    • Dr. Bruce Siegel
      By protecting the healthcare safety net, Biden can put us on the path to a stronger country
      Joe Biden
      Revamp of the nation's vaccination effort may not be enough
      COVID-19 hastens hospitals' revenue cycle outsourcing moves
      Operation Warp Speed Dr. Moncef Slaoui, Pfizer Group President Angela Hwang, Moderna CEO Stephane Bancel, CVS Health Executive Vice President Karen Lynch and McKesson CEO Brian Tyler participate in a panel discussion on the COVID-19 vaccine.
      Hospitals, drug companies strive to stand out virtually at JPM
    • The Check Up: Trenda Ray
      The Check Up: Trenda Ray of the University of Arkansas for Medical Sciences
      Trenda Ray
      Q&A: Arkansas nursing leader looking for creative staffing solutions as COVID cases surge
      Cook Lydia 4x6_i.jpg
      Northeast Ohio health systems increase community benefit values in 2019
      Vaccine rollout hits snag as health workers balk at shots
    • CMS approves rule forcing insurers to ease prior authorization
      COVID-19 still a big uncertainty for insurers in 2021
      Health insurers' outlook boosted after Dems' Georgia win
      humana_i.jpg
      Humana supports Ohio not-for-profits with $500,000
    • Joe Biden
      Revamp of the nation's vaccination effort may not be enough
      CMS will raise Medicare Advantage plan payments by 4.08% in 2022
      CMS approves rule forcing insurers to ease prior authorization
    • Operation Warp Speed Dr. Moncef Slaoui, Pfizer Group President Angela Hwang, Moderna CEO Stephane Bancel, CVS Health Executive Vice President Karen Lynch and McKesson CEO Brian Tyler participate in a panel discussion on the COVID-19 vaccine.
      Hospitals, drug companies strive to stand out virtually at JPM
      Intermountain, Trinity, Memorial Hermann behind $300M private equity fund
      Operation Warp Speed to bump up McKesson's stock price
      Reporter's notebook: J.P. Morgan's 2021 health conference
    • A man in a room with servers.
      Momentum grows to outsource hospital tech functions in 2021
      5 things to know about Google's $2.1B Fitbit acquisition
      Providence bets on machine-learning, consolidating data centers
      Mental health treatment was most common telehealth service during COVID
    • Sticking to Mediterranean diet is good for the brain
      Chance of COVID-19 triage care looms over Arizona hospitals
      U.S. ramps up vaccinations to get doses to more Americans
      367146427.jpg
      Should businesses mandate that staff get the COVID vaccine?
    • Cone Health CEO, CFO to depart amid pending Sentara merger
      Tower Health's finance chief resigning after years of steep losses
      AHRQ director Gopal Khanna resigns in response to Capitol riot
      Brigham president stepping down after Moderna controversy
    • Midwest
    • Northeast
    • South
    • West
  • Insights
    • ACA 10 Years After
    • Best Practices
    • InDepth Special Reports
    • Innovations
    • The Affordable Care Act after 10 years
    • New care model helps primary-care practices treat obesity
      doctor with patient
      COVID-19 treatment protocol developed in the field helps patients recover
      Rachel Wyatt
      Project to curb pressure injuries in hospitals shows promise
      Yale New Haven's COVID-19 nurse-staffing model has long-term benefits
    • Michellene Davis
      Healthcare leadership lacks the racial diversity needed to reduce health disparities
      Dr. James Hildreth
      How medical education can help fight racism
      Modern Healthcare InDepth: Breaking the bias that impedes better healthcare
      Videos: Healthcare industry executives describe their encounters with racism
      Quotes from rebadged employees
      Outsourcing IT, revenue cycle takes toll on internal culture
    • A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
      self service station
      COVID-19 pushes patient expectations toward self-service
      Targeting high-risk cancer patients with genetics
      A nurse holds up a phone with a message to a family member saying surgery has started.
      Texting, tablets help hospitals keep family updated on patient care
  • Transformation
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Highmark Health inks six-year cloud, tech deal with Google
      Study: 1 in 5 patients report discrimination when getting healthcare
      HHS proposes changing HIPAA privacy rules
      Android health records app launches at 230 health systems
    • California hospitals prepare ethical protocol to prioritize lifesaving care
      Amazon, JPMorgan Chase, Berkshire Hathaway disband Haven
      Digital pathways poised to reshape healthcare continuum in 2021
      Healthcare was the hardest hit by supply shortages across all U.S. industries
    • A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
      New care model helps primary-care practices treat obesity
      How hospitals are building on COVID-19 telehealth momentum
      Researchers: Hospital price variation exacerbates health inequities
    • MedPAC votes to boost hospital payments, freeze or cut other providers
      Most Next Gen ACOs achieved bonuses in 2019
      Congress recalibrates Medicare Physician Fee Schedule after lobbying
      CMS approves rule to encourage value-based drug pricing
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
    • Health Systems Financials
      Executive Compensation
      Physician Compensation
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
    • Wellstar CEO calls adapting for the pandemic her bold move
      Howard P. Kern
      Recognizing the value of telehealth in its infancy
      Dr. Stephen Markovich
      A bold move helped take him from family doctor to OhioHealth CEO
      Dr. Bruce Siegel
      Why taking a hospital not-for-profit was Dr. Bruce Siegel’s boldest move
    • Barry Ostrowsky
      Ending racism is a journey taken together; the starting point must be now
      Laura Lee Hall and Gary Puckrein
      Increased flu vaccination has never been more important for communities of color
      John Daniels Jr.
      Health equity: Making the journey from buzzword to reality
      Mark C. Clement and David Cook
      We all need to 'do something' to fight inequities and get healthcare right, for every patient, every time
    • Dr. Bruce Siegel
      By protecting the healthcare safety net, Biden can put us on the path to a stronger country
      Healing healthcare: some ideas for triage by the new Congress, administration
      Dr. Sachin H. Jain
      Medicare for All? The better route to universal coverage would be Medicare Advantage for All
      Connectivity: a social determinant of health that can exacerbate all the others
    • Letters: Eliminating bias in healthcare needs to be ‘deliberate and organic’
      Letters: Maybe dropping out of ACOs is a good thing for patients
      Letters: White House and Congress share blame for lack of national COVID strategy
      Letters: VA making strides to improve state veterans home inspections
    • Sponsored Content Provided By Optum
      How blockchain could ease frustration with the payment process
      Sponsored Content Provided By Optum
      Three steps to better data-sharing for payer and provider CIOs
      Sponsored Content Provided By Optum
      Reduce total cost of care: 6 reasons why providers and payers should tackle the challenge together
      Sponsored Content Provided By Optum
      Why CIOs went from back-office operators to mission-critical innovators
  • Awards
    • Award Programs
    • Nominate
    • Previous Award Programs
    • Other Award Programs
    • Best Places to Work in Healthcare Logo for Navigation
      Nominations Open - Best Places to Work in Healthcare
      Nominations Open - Health Care Hall of Fame
      Nominations Open - 50 Most Influential Clinical Executives
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Top 25 Minority Leaders
    • Top 25 Women Leaders
    • Excellence in Nursing Awards
    • Design Awards
    • Top 25 COOs in Healthcare
    • 100 Top Hospitals
    • ACHE Awards
  • Events
    • Conferences
    • Galas
    • Webinars
    • COVID-19 Event Tracker
    • Leadership Symposium
    • Healthcare Transformation Summit
    • Women Leaders in Healthcare Conference
    • Workplace of the Future Conference
    • Strategic Marketing Conference
    • Social Determinants of Health Symposium
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Minority Leaders Gala (2022)
    • Top 25 Women Leaders Gala
  • Listen
    • Podcast - Next Up
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
    • Carter Dredge
      Next Up Podcast: Ready, set, innovate! Innovation and disruption in healthcare
      Next Up Podcast: COVID-19, social determinants highlight health inequities — what next?
      Next Up Podcast: Saving Rural Health
      Ceci Connolly
      Next Up Podcast: How to navigate the murky post-election waters
    • An older man wearing a mask receiving a vaccine.
      Beyond the Byline: Verifying information on the chaotic COVID-19 vaccine rollout
      doctor burnout
      Beyond the Byline: How healthcare supply chain struggles contribute to employee burnout
      Beyond the Byline: Covering race and diversity in the healthcare industry
      Beyond the Byline: How telehealth utilization has impacted investor-owned company earnings
    • Leading intention promote diversity and inclusion
      Introducing Healthcare Insider Podcast
    • The Check Up: Trenda Ray
      The Check Up: Trenda Ray of the University of Arkansas for Medical Sciences
      The Check Up: Dr. Kenneth Davis
      The Check Up: Dr. Kenneth Davis of Mount Sinai Health System
      The Check Up: Dr. Thomas McGinn
      The Check Up: Dr. Thomas McGinn of CommonSpirit Health
      The Check Up: Mark Ganz
      The Check Up: Mark Ganz of Cambia Health Solutions
    • Video: Ivana Naeymi Rad of Intelligent Medical Objects
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Finance
December 19, 2015 12:00 AM

Has the budget package totaled the Cadillac tax?

Shannon Muchmore
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    Getty Images
    Members of Congress and aides walk down the East Front steps of the House of Representatives after the last scheduled vote of the year Dec. 18. The omnibus bill to fund the government passed Congress and now heads to the president's desk.

    The temporary freezes on three Affordable Care Act taxes approved by Congress last week won't have an immediate impact on the law's coverage expansions, but could damage its financing if the taxes are indefinitely suspended or repealed, experts say.

    Congress approved the tax delays as part of a sweeping package of tax cuts worth more than $600 billion. Lawmakers also approved a $1.15 trillion spending package.

    The tax legislation includes delaying for two years implementation of the ACA's so-called Cadillac plan tax, which was scheduled to go into effect in 2018. It also freezes for two years the law's 2.3% excise tax on medical devices that began in 2013, a big win for the device industry that's expected to boost profits. And it delays the tax on health insurance premiums by one year, which could lower premiums.

    Those changes are projected to cost more than $30 billion over two years, according to Congress' Joint Committee on Taxation. The White House said the president will sign the tax and spending bills.

    The package includes a $2 billion funding increase for the National Institutes of Health, and a continued requirement that the ACA's risk-corridor program, which compensates health insurers that sign up sicker-than-expected populations on the insurance exchanges, be deficit-neutral. That provision has been blamed for financial losses among many insurers selling exchange plans.

    Not included in the legislation was a provision hospitals sought to exempt those currently building outpatient facilities from recent Medicare site-neutral payment rules.

    The delay of the three ACA taxes was the culmination of several years of intense lobbying by labor unions, employers, medical-device makers, and health insurers to roll back those levies. It resulted from a deal between Democrats, who support the ACA but want to please their labor union allies who hate the Cadillac tax, and Republicans who oppose the entire ACA and need Democratic support to roll back other financing mechanisms as well. Some observers see the deal as a shrewd way for House Speaker Paul Ryan to chip away at the law's foundations with the goal of eventual repeal.

    Of the three delayed ACA taxes, there was the greatest concern about the Cadillac tax, because the Obama administration and many economists argued that it would help control healthcare spending.

    It imposes a 40% levy on the value of employer-sponsored plans that exceed $10,200 for individuals and $27,500 for families. About a quarter of employer health plans would have been subject to the tax in its first year, increasing to 42% by 2028, according to the Kaiser Family Foundation.

    MH Takeaways

    The delay of the three ACA taxes was the culmination of years of intense lobbying by labor unions, employers, medical-device makers and health insurers to roll back those levies.

    Many employers have been shifting more costs to employees through higher deductibles and cost-sharing, and have cited the looming Cadillac tax as a factor.

    Loren Adler, research director at the Committee for a Responsible Federal Budget, a deficit hawk advocacy group, said if the tax ultimately is repealed, which he thinks is likely, employers will reduce their efforts to control the costs of employee health benefits. Congress, he said, is losing sight of the importance of the ACA's pay-fors and cost-control features. “It's basically just economists and policy wonks pushing for it,” Adler said. “And economists aren't great at messaging, apparently.”

    James Klein, president of the American Benefits Council, which represents employers, said his group sees the two-year delay of the Cadillac tax “as a first step toward the ultimate goal of repeal.”

    He said the federal estimate of how much revenue the tax would bring in was greatly overstated because it assumed employers would increase wages as health benefit costs fell, boosting federal income-tax collections. “Employers just simply say that that's not going to happen,” Klein said.

    What really matters is how the next president approaches the issue of the Cadillac plan tax, said Linda Blumberg, a healthcare researcher at the Urban Institute.

    The three Democratic presidential candidates all have called for repealing the tax, which labor unions hate. Some GOP presidential candidates have called for limiting the tax exclusion for employer health plans, but also have denounced the Cadillac plan tax.

    Blumberg said that while there will be an effort to find alternative cost-containment tools, powerful stakeholders will resist, making it difficult to reach political consensus. “When you say cost containment, that means somebody is getting paid less on the provider side,” Blumberg said.

    Theda Skocpol, a Harvard University professor of government who studies healthcare reform, warned that repealing the taxes without replacement revenue will create strong political pressure after the 2016 elections to shrink ACA coverage expansions. “This is a dangerous, slippery slope toward squeezing progressive and adequate funding for health insurance, which will eventually lead to a reduction in benefits,” she said.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Hospitals, drug companies strive to stand out virtually at JPM
    Hospitals, drug companies strive to stand out virtually at JPM
    Intermountain, Trinity, Memorial Hermann behind $300M private equity fund
    Intermountain, Trinity, Memorial Hermann behind $300M private equity fund
    Sponsored Content
    Get Free Newsletters

    Sign up for free enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today

    The weekly magazine, websites, research and databases provide a powerful and all-encompassing industry presence. We help you make informed business decisions and lead your organizations to success.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS
    • Instagram

    Stay Connected

    Join the conversation with Modern Healthcare through our social media pages

    MDHC_Logotype_white
    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • This Week's News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition
    • Insights
      • ACA 10 Years After
      • Best Practices
      • InDepth Special Reports
      • Innovations
    • Transformation
      • Patients
      • Operations
      • Care Delivery
      • Payment
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Award Programs
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Top 25 Minority Leaders
        • Top 25 Women Leaders
      • Nominate
      • Previous Award Programs
        • Excellence in Nursing Awards
        • Design Awards
        • Top 25 COOs in Healthcare
      • Other Award Programs
        • 100 Top Hospitals
        • ACHE Awards
    • Events
      • Conferences
        • Leadership Symposium
        • Healthcare Transformation Summit
        • Women Leaders in Healthcare Conference
        • Workplace of the Future Conference
        • Strategic Marketing Conference
        • Social Determinants of Health Symposium
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Minority Leaders Gala (2022)
        • Top 25 Women Leaders Gala
      • Webinars
      • COVID-19 Event Tracker
    • Listen
      • Podcast - Next Up
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing