By Sarah Ferris - 02/04/16 08:25 AM EST
The Obama administration is agreeing to scale back its unpopular “Cadillac tax" on high-cost health insurance plans as part of its years-long fight to keep the tax in place.
Jason FurmanJason FurmanOvernight Finance: Wall Street awaits Brexit result | Clinton touts biz support | New threat to Puerto Rico bill? | Dodd, Frank hit back Furman says Pacific trade deal will pass this year Overnight Energy: Last nuclear plant in California to close MORE, chief economic adviser for President Obama, said Wednesday that the administration would propose raising the threshold for the tax in areas where healthcare is more costly.
In states where the average premium for “gold” coverage exceeds the Cadillac-tax threshold under ObamaCare, that threshold would instead be raised to the average gold premium, Furman wrote in an article published in the New England Journal of Medicine.
“This policy prevents the tax from creating unintended burdens for firms located in areas where health care is particularly expensive, while ensuring that the policy remains targeted at overly generous plans over the long term if health costs rise faster than the tax thresholds,” Furman said.
The Cadillac tax is one of the most controversial pieces of ObamaCare — with opponents that include House Minority Leader Nancy Pelosi (D-Calif.) and Senate Minority Leader Harry ReidHarry ReidHispanic Caucus PAC looks to flex its muscles in 2016 Say NO to PROMESA, say NO to Washington overreach Overnight Finance: Wall Street awaits Brexit result | Clinton touts biz support | New threat to Puerto Rico bill? | Dodd, Frank hit back MORE (D-Nev.).
Pelosi and Reid helped lead efforts to delay the tax for two years as part of the most recent budget deal, along with a two-year delay of the medical device tax.
The Obama administration, led by Furman, has stood strong against full repeal, however. Supporters of the Cadillac tax argue that it is the most significant piece of ObamaCare designed to control costs.
Opponents of the tax dismissed the proposal, arguing that the tax “cannot be fixed” and must be repealed.
"We're glad the Administration recognizes the 'Cadillac Tax' is seriously flawed. But its impact in high cost areas is just one of its many problems,” the group wrote in a statement.