“If you want to repeal the Affordable Care Act, you want to have the most opposition to the bill. If you were able to repeal some of the more controversial provisions, that might take some of the momentum away,” Lorenzen said.
“Republicans by and large believe the President’s health law should be repealed in its entirety and that includes Obamacare’s Cadillac tax. It’s a misguided provision that creates a draconian policy that will hit countless Americans with a 40 percent excise tax,” said a spokeswoman for the Senate Finance Committee majority, which has jurisdiction over the tax.
Neither the Finance Committee nor the Ways and Means Committee, which has jurisdiction over the tax in the House, has indicated whether they will attempt to litigate the repeal. If they do decide to move forward on it, however, they are almost certain to receive backlash from some of the more conservative members of the GOP.
“Most GOPers don't believe reconciliation or any other parliamentary procedure will result in repeal, so they believe fixes are in order,” said a lobbyist familiar with the situation. “Unfortunately, politics says they must do repeal first... Because if they don't people will wonder why they're fixing something they're going to try and repeal later.”
Another catch for Republicans who want to repeal the Cadillac tax is it actually is pretty similar to their own policy prescriptions for tax treatment of employer-based insurance. Repealing it now may hurt them later if they try to do something similar in their own health care plan.
The lobbyist said that he believes Republican leadership will ultimately want to work across the aisle to pass the repeal. However, that’s when the door opens for Democrats to have a big problem.
Taking up any reform to Obamacare admits the law is imperfect, although many Democrats have openly acknowledged the law isn’t perfect and needs to be tweaked. But once they get into the negotiating process, the biggest hurdle will almost certainly be how to pay for a repeal of the tax.
“The one thing that will slow this down is if Democrats all of the sudden start talking about the importance of fiscal responsibility and opposing any bill that's not paid for. Or if they object to certain GOP proposals to pay for it,” said the lobbyist. “The GOP will wonder why...do I have to use one...of my tax payfors, which I could use for overall rate reduction, to pay for the Democrats’ Cadillac tax problem.”
There are several reasons Democrats would want to pay for a repeal. First, the tax helps pay for the Affordable Care Act, and repealing it without a replacement will add to the deficit. Second, they have already put a stake in the ground that repealing pieces of Obamacare is only acceptable if the repeals are paid for -- a line central to several Democrats’ opposition to the Republican-favored medical device tax repeal that has passed with bipartisan support in the House and is pending in the Senate.