Obama chief economist defends 'Cadillac tax'

President Obama’s chief economist delivered a strong defense of the “Cadillac tax" on health plans Tuesday morning, just hours before Congress is expected to unveil a budget deal that would again delay the measure.  

“It's really important to us that we don't see that measure repealed, and we will work hard to prevent that from happening,” Jason FurmanJason FurmanThe Hill's Morning Report - Biden asks Congress to expand largest relief response in U.S. history Progressives offer mixed messages on key Biden economic aide Former Treasury secretaries from both parties call for immediate COVID-19 relief deal MORE, chairman of the Council of Economic Advisers, said at a Politico Morning Money event.


The Cadillac tax, which imposes a 40 percent fee on health benefits above a certain threshold, is among several ObamaCare provisions that could be put on hold as part of the soon-to-be-released tax extenders package.

Those tax breaks have been negotiated alongside the $1.1 trillion government spending bill, which is expected to be released later Tuesday morning.  

The Obama administration has repeatedly said it wants to keep in place the Cadillac tax — as well as the medical device tax and the health insurance tax — but has come short of issuing a veto threat on the package. 

Democrats, led by House Minority Leader Nancy Pelosi (D-Calif.) and Senate Minority Leader Harry ReidHarry Mason ReidSchumer becomes new Senate majority leader Biden faces tall order in uniting polarized nation Senators vet Mayorkas to take lead at DHS MORE (D-Nev.), have been quietly negotiating a two-year moratorium of the provision since September, The Hill reported last month. 

“I can't tell you any, 'This provision we'd accept, this provision we wouldn't,' because it'll come together as a whole, and we'll be evaluating it as a whole,” Furman said.

The Cadillac tax has been one of the most controversial pieces of the healthcare law’s rollout, with labor unions and business groups particularly fearful that they will have to trim benefits to avoid the tax. Both leading Democratic presidential candidates, former Secretary of State Hillary ClintonHillary Diane Rodham ClintonBiden must wait weekend for State Department pick Texas Supreme Court rejects Alex Jones request to toss lawsuits from Sandy Hook parents Paris Agreement: Biden's chance to restore international standing MORE and Sen. Bernie SandersBernie SandersSunday shows preview: All eyes on Biden administration to tackle coronavirus The Hill's 12:30 Report: Next steps in the Trump impeachment Sanders selling sweatshirts with his famous inauguration pose for charity MORE (I-Vt.), have said they would roll back the tax.

But economists, particularly within the White House, have argued that the tax has a larger role than simply collecting revenue for the healthcare law. They argue it puts pressure on healthcare consumers to limit unnecessary spending. As a result, it ultimately keeps prices low.  

“We certainly think that is an important health policy. It's about giving business and health insurance companies and individuals an incentive to figure out how to slow the health costs, that raises wages,” Furman said.