Congress strikes taxes that helped pay for the ACA

Money, taxes and the ACARemember all those taxes and fees meant to pay for the Affordable Care Act?

The ones that keep getting delayed, suspended, postponed – or put into effect and then halted again?

The big end-of-year spending and tax bill Congress plans to approve this week will eliminate three big taxes – the health insurance tax, the 2.3 percent excise tax on medical devices, and the so-called Cadillac tax on certain high-value employer plans. They were to have provided billions to cover the cost of coverage expansion. (An extra 0.9 percent Medicare tax on income above a certain threshold is still in effect.)

The health care industry had fought hard against the three taxes – and labor unions had also opposed the Cadillac tax, which would have hit generous union-negotiated health benefits hard.  But repealing the three taxes means foregoing tens of billions of dollars to pay for the ACA.

The medical device tax and health insurance tax had been imposed on and off. The health insurance tax took effect in 2014 but policymakers suspended it for 2017 and 2019. The device tax was in effect from 2013 through 2015,

Congress had kept kicking the can on the “Cadillac” tax, postponing it until 2022.

Right now the move to eliminate the taxes is bipartisan. But, depending on what happens in next year’s elections, the fact that the ACA is no longer paid for may create a new opening for Republicans to fight it on budgetary grounds.

In addition – for those looking to Congress to take on powerful health sectors to bring down health care costs, it’s not a good omen. Congress did not complete legislation this year to either address drug costs nor end “surprise billing.”

Read more about the taxes here:

Paul Van de Water of the Center for Budget and Policy Priorities argues in this blog post against ending the taxes, saying they are not as ill-conceived or damaging as the industry voices calling for repeal maintain. (He did outline some ways to modify or replace the Cadillac tax to address some critics)

The deficit-reduction minded Committee for a Responsible Federal Budget looks at the 10 year cost.

The Chamber of Commerce endorses the tax repeal.

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