Additionally, the late-year spending deal hammered out by Republicans and Democrats and announced late Tuesday will delay for two years the imposition of the so-called Cadillac tax on high-value health plans.
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The highly-debated excise tax, presently set to take effect in 2018, will force employers to pay a steep 40 percent tax for expensive health plans that exceed certain cost thresholds.
“291 cosponsors of the House legislation further illustrates the growing bipartisan support to repeal this onerous tax”, asserted James A. Klein, President of the American Benefits Council.
The nonpartisan Kaiser Family Foundation has estimated that the tax could have affected 26 percent of all employers in its first year, and it could eventually reach all employers as long as insurance premiums continue to climb faster than inflation. The Cadillac tax, he said, would not punish high-paid corporate executives but “working families, older workers, and women”.
Kaiser Vice President Gary Claxton said it is hard to estimate what sort of financial hit companies could face from the tax.
The claims data of the benchmark the law now uses – Blue Cross Blue Shield’s standard benefit option under the Federal Employees Health Benefits Program – has been criticized as an inaccurate representation of the national workforce.
Employers with generous benefit packages have been keeping an eye on the approaching tax for years, and some have already implemented changes with an eye to avoiding the tax. “Everyone wanted something and they weren’t going to get it if the other side didn’t go along”.
Economists and those who have pushed the U.S. to rein in healthcare costs also consider it essential to balance out the cost that comes from one of Obamacare’s other major goals: universal health coverage.
Diesel engine maker Cummins Inc. started wellness programs to help employees eat better and exercise more in an attempt to lower its costs. The insurer tax applies to business lines including private Medicare, Medicaid and individual plans.
“It’s bad enough that this budget-busting tax deal would add to the debt, but lawmakers have decided to make things worse by undermining the cost-control measures in the Affordable Care Act”, said Maya MacGuineas of the Committee for a Responsible Federal Budget. “That process begins by approving a two-year delay of the tax immediately”. Those plans were laid out months ago. If signed into law, the tax delay would translate into earnings-per-share bumps of 2.9 percent and 2.8 percent in 2016 and 2017 respectively for medical device companies covered by Wells Fargo Securities LLC, according to a report by Larry Biegelsen, senior analyst.
Sen. Marco Rubio, R-Fla., a GOP presidential candidate, took credit for the provision Wednesday, which he said will prevent taxpayers from having to bailout insurance companies that lose money on the plans they offer on the ACA exchanges. The senators introduced the Middle Class Health Benefits Tax Repeal Act to fully repeal this excise tax. But they believe companies were already preparing for it by scaling back plans.
“I think what employees can expect to see is more of the same efforts by employers to moderate the impact of rising health costs”, he added.
“The real problem is: How do we get health care costs under control?” Adler put together this chart showing that repealing the three taxes permanently would reduce the health law’s revenue by $1.1 trillion – about a third of the health law’s $3.5 trillion in overall revenue.
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