Economists rush to defense of Cadillac tax

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Dozens of economists and health experts from both sides of the aisle are coming to the defense of ObamaCare’s embattled Cadillac tax.

The 101 experts argue, in a letter distributed by the liberal Center on Budget and Policy Priorities, that the tax on high-cost health plans will slow the rise of healthcare costs, because employers don’t have enough incentive now to limit the sort of plans they offer.

The letter comes after Democratic presidential candidate Hillary Rodham Clinton endorsed scrapping the Cadillac tax, a position that is popular among organized labor. Sen. Bernie Sanders (I-Vt.), another Democratic candidate, also opposes the tax, and Republicans have long sought to repeal it.

The CBPP has said that it’s open to some minor tweaks to the Cadillac tax, and that Thursday’s letter was not a direct response to Clinton’s statement this week.

The letter’s signers include Jonathan Gruber, the economist who famously suggested the Obama administration relied on the “stupidity” of the U.S. voter to pass the Affordable Care Act; Douglas Elmendorf, who was head of the Congressional Budget Office (CBO) until earlier this year; and Ezekiel Emanuel, whose brother Rahm was White House chief of staff when ObamaCare was enacted.

Other signers include Alice Rivlin, the founding chief of the CBo, and Joseph Antos of the conservative American Enterprise Institute.

The letter’s signers noted that they “hold widely varying views on other provisions of the Affordable Care Act, and we recognize that measures other than the Cadillac tax could have been used to restrict the open-ended health insurance tax break.” 

“But, we unite in urging Congress to take no action to weaken, delay, or reduce the Cadillac tax until and unless it enacts an alternative tax change that would more effectively curtail cost growth,” they added.

Clinton, Sanders and other opponents of the Cadillac tax from the left have made it clear that they would find ways to plug the deficit hole — estimated to be $91 billion over a decade — that would come from repealing the tax. Republicans aren’t as worried about finding offsets; they’ve long been interested in dismantling the Affordable Care Act entirely.

A bipartisan group of lawmakers in both the House and the Senate have signed on to legislation to scrap the tax. 


This post was updated at 12:33 p.m. to clarify the role the Center on Budget and Policy Priorities played in the letter. 

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