WASHINGTON DC (July 16, 2019) — The House of Representatives is scheduled to vote on a permanent repeal of the "Cadillac tax" on high-cost health insurance plans Wednesday, a major funding provision for the Affordable Care Act (Obamacare). This change would cost almost $200 billion from 2022 to 2029, and over $1 trillion in the following decade. The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
We are re-entering an era of trillion-dollar deficits, and Congress is considering yet another massive tax-cut — it appears there is no end to this madness.
The Cadillac tax is one of the most important tools we have to control health-care cost-growth in the private sector. Repealing it will drive up health-care costs while adding more than $1.2 trillion to the debt over the next two decades and reducing wages by trillions over that time period.
Repealing the Cadillac tax without a replacement would also remove one of the most important pay-fors of the Affordable Care Act, making it harder for advocates to describe that law as fiscally-responsible, and ultimately leading to more health-care dysfunction and instability.
We cannot keep passing tax-cuts and spending-increases at a time when debt is at near-record levels as a share of the economy. We should be doing the reverse.
Congress should not buck another hard choice and go back on a promise from the past. If Congress wants to remove the Cadillac tax, they should find a replacement that not only pays for the lost revenue but also controls the growth of health-care costs. Economists and experts from the left, right, and center all agree on the need to limit expensive tax-breaks for employer health-care, which the Cadillac tax does. Lawmakers shouldn’t sacrifice smart policy for interest-group politics.
Our budgeting process is in chaos. Even when Congress makes a difficult choice, the next round of lawmakers is all-too-happy to repeal it. Congress should not revisit the past to make the debt worse; it should fix the numerous fiscal issues we are now facing today and in the future.
