“I think we have to do something about the Cadillac tax. It’s falling on too many middle-class people, and we have to do something,” said Sen. Chuck Schumer, the No. 3 Democrat in the upper chamber and a member of the Finance Committee. Including a delay of the tax in a tax-extenders package, he said, would “be fine by me.”
But when asked whether he was optimistic about a delay of the tax getting done, he had a short reply: “Don’t know.”
And although Republicans generally oppose repealing the medical-device tax, the Senate’s No. 2 Republican said the Cadillac tax is too important a negotiating chip against the health care law to throw away without serious consideration.
“I don’t think the Cadillac tax is going to be part of any of this end-of-the-year negotiation. I think, frankly, it’s pretty good leverage to do some more systemic reforms for the Affordable Care Act,” Majority Whip John Cornyn told reporters. “It’s too valuable to be trading off for other smaller, less valuable items here at the end of the year.”
The Cadillac tax is a 40 percent excise tax on employer-sponsored health benefits that go above a certain limit. Although it doesn’t kick in until 2018, lobbyists say the tax burden is already being shifted to workers, and not just those with exceptionally generous health plans.
Opposition to the tax has come from both parties in both the House and the Senate, although two separate bills repealing it have been introduced in each chamber, and cosponsors fall largely along party lines. Leading the charge in the upper chamber are Republican Sen. Dean Heller and Democratic Sen. Sherrod Brown, both members of the Finance Committee and both heading a different bill. Although neither party has put forth a way to pay for the repeal, Democrats say that a repeal would need to be offset.
But any talk of trading health care taxes in the tax-extenders package may also become less relevant as negotiations over the extenders themselves go south.
“I think everything is in the mix, but the last word I heard was, outside of the two-year extension on what’s already been voted on, everything else looks like it’s dead,” said Sen. Richard Burr in an interview. He said he would have been interested in trading the medical-device tax for the Cadillac tax, and “that’s what talk was about, but I don’t think it worked out.”
Sen. Orrin Hatch, chairman of the Finance Committee, declined to comment on the content of the ongoing negotiations, but said he remains optimistic: “Don’t count us out,” he said.
Brown also remains confident that a Cadillac-tax delay will be included in the final tax-extenders package, according to a Brown aide.
The Cadillac tax was included in Obamacare to help pay for the law, but also as a way to deal with the employer-sponsored-coverage tax exclusion. It also was supposed to help control rising health care costs.