Something Congress can agree to: Fully repealing the ‘Cadillac tax’

Getty Images

The American people have witnessed bitter partisan fights for the better part of the last decade over how to best solve the problems of rising costs and reduced access to insurance in our nation’s healthcare system. However, our bipartisan proposal to fully repeal the 40 percent excise tax on high-cost employer sponsored health coverage, commonly referred to as the “Cadillac tax,” is something we can all agree on. 

Congress passed year-end legislation that included a delay of the Cadillac tax for two years.  This is a great start, but we cannot ignore the fact that middle class Americans will still bear the burden of a 40 percent excise tax.  For the next two years, we will use this victory as momentum towards fully repealing the Cadillac tax.  

ADVERTISEMENT
The popular name of the tax implies that it is only going to hit a few individuals with gold-plated health insurance plans. When this was proposed and included in the ACA, people cited Goldman Sachs' executive health benefits plans as the poster child for the Cadillac plan. But in reality, this tax targets many plans that aren't gold plated at all. In fact, they are barely bronze plated. It taxes middle class workers. 

In September we introduced the “Middle Class Health Benefits Tax Repeal Act of 2015” after years of hearing from our constituents about the devastating impact this tax will have on Americans who have job-based insurance. Last week, 90 senators voted on the record in support of repealing the tax. 

The Cadillac tax will hurt middle class families who, for reasons outside of their control, have health plans that already or soon will reach the Cadillac tax’s cost limits. The tax will force many employers to pay steep taxes on their employees’ health plans and flexible spending accounts, and possibly eliminate some employer-provided health coverage plans altogether. Under this tax, deductibles will be even higher and benefits will be reduced even more—putting a strain on middle class families trying to make ends meet. 

Health insurance premiums increased by 61 percent over the last decade, according to the non-partisan Kaiser Family Foundation. Deductibles for workers with employer-sponsored coverage have risen nearly seven times faster than workers’ wages since 2010. Much of this has occurred long before employers started planning their benefit packages around this looming tax. As more health plans fall within the taxable threshold of the Cadillac tax, an increasing number of middle-class workers with modest health plans could experience reductions in benefits and increases in out-of-pocket expenses.

In Nevada, 1.3 million workers who have employer-sponsored health insurance plans could be hit by the Cadillac tax. In New Mexico, 750,000 workers could experience significant changes to their health care as a result of this tax. These are state and municipal employees in Carson City and Santa Fe, service workers on the Las Vegas strip, and small businesses in Albuquerque. 

The voices of opposition to the tax are louder and are more in unison than we have witnessed throughout the entire health care debate. Organized labor, chambers of commerce, local and state governments, small businesses, and rural electric co-ops have come together to express the same concern: the Cadillac tax needs to be fully repealed or our employees will experience massive changes to their health care.

Our coalition to repeal this tax is growing by the day. This is not just something that has broad bipartisan support in the Senate. More than 290 members on both sides of the aisle in the House of Representatives have signed on to legislation to fully repeal the tax. 

The two of us do not agree with each other about the Affordable Care Act. But we do agree that Republicans and Democrats must put the partisan politics of the health care debate aside and work together to do away with this tax on the middle class.

Heller is Nevada’s junior senator, serving since 2011. He sits on the Banking, Housing and Urban Affairs; the Commerce, Science and Transportation; the Finance; and the Veterans’ Affairs committees. Heinrich is New Mexico’s junior senator, serving since 2013. He sits on the Armed Services; the Energy and Natural Resources; and the Intelligence committees.

More in News

GOP senator: Something 'very, very good' can come from Brexit vote

Read more »