US: A Key Piece of Obamacare Finds an Unlikely Foe: House Democrats - - PressFrom - US

USA Key Piece of Obamacare Finds an Unlikely Foe: House Democrats

22:15  17 july  2019
22:15  17 july  2019 Source:

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A Key Piece of Obamacare Finds an Unlikely Foe: House Democrats© Angel Valentin for The New York Times People signing up for health insurance plans under the Affordable Care Act, in Miami in 2016.

WASHINGTON — In the heat of the legislative fight over the Affordable Care Act, officials in the Obama administration argued that a steep tax on high-cost, generous health insurance plans would hold down soaring health care costs by persuading more Americans to use the health care system only when necessary.

Democrats swallowed hard and included the Cadillac tax in the landmark health law.

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On Wednesday, that central feature of Obamacare is expected to be dealt a blow by an unlikely foe: House Democrats.

The House will vote on whether to repeal the tax, not only a key cost-containment provision in Barack Obama’s signature health law but also one of the main ways it was to pay for itself. Unions have never liked it, nor have business groups and Republicans.

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So with neither party showing much concern for the government’s rising tide of red ink, the House will move to permanently block the tax from taking effect — and balloon deficits by $168 billion over the next decade. Senator Charles E. Grassley of Iowa, the chairman of the tax-writing Senate Finance Committee, has suggested that the Senate could follow suit.

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“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,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “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.”

The tax is supposed to take effect in 2022, after being delayed twice. But a broad bipartisan vote in the House would increase the likelihood that it never does. Since President Trump took office, the health law has suffered repeated blows. Mr. Trump’s tax cut eliminated the financial penalty for Americans who decline to get health coverage, and a lawsuit backed by the Trump administration is seeking to declare Obamacare’s requirement that most people have insurance — and possibly the whole law — unconstitutional.

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The Trump administration has instituted regulations to undermine the law, for example expanding the sale of “short-term” health insurance policies that do not have to cover pre-existing medical conditions or other health benefits deemed by the law as “essential,” such as emergency services and prescription drugs. And the White House has slashed funding to promote Obamacare sign-ups and for “navigators” who are supposed to held consumers enroll.

In seeking to get rid of the tax, the Democrats appear in one sense to be joining the slow dismantlement — or at least undermining their own argument that the embattled health law will save taxpayers more than it costs them over the long run while holding down health spending broadly.

But that appears to be less of a concern than complaints from some of the Democrats’ key supporters, who say the Cadillac tax would hurt middle-class workers. The bill’s sponsor, Representative Joe Courtney of Connecticut, titled it the “Middle Class Health Benefits Tax Repeal Act” and recruited 367 co-sponsors, including 200 Democrats.

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Even some liberal economists, backed by the unions, are urging repeal. The Economic Policy Institute, a liberal research group, argued ahead of the vote on Wednesday that health care costs are already decelerating, so the tax is unnecessary both to pay for the health law and to further slow down health cost increases.

“To put it simply, the tax aims to reduce patients’ utilization of health care. But the glaring problem of U.S. health costs is not excess utilization; instead it is high and rising prices for health care,” wrote Thea M. Lee, president of the institute and a former leader of the A.F.L.-C.I.O., and the economist Josh Bivens. “Smart cost containment policy should address these prices, not seek to ratchet down how much care patients seek.”

With so many supporters, Mr. Courtney secured a vote on the House’s fast-track calendar, which requires two-thirds of the House to vote for passage but also allows the bill to bypass rules that would require the cost to be offset by spending cuts or tax increases elsewhere.

The party’s support for the repeal is not new: Hillary Clinton called for repealing the tax during her 2016 presidential campaign, as did Senator Bernie Sanders.

Repealing the 40 percent excise tax on generous employer-sponsored health plans would increase projected federal deficits considerably, according to the nonpartisan Congressional Budget Office, and so far there is no plan for replacing the lost revenue. Health economists, who have generally been the biggest supporters of the tax, see it as an important way to contain rising health care costs, contending that generous health benefits encourage people to get more medical care than they need.

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Paul N. Van de Water, a senior fellow at the Center on Budget and Policy Priorities, a liberal research center, described the tax as “one of the A.C.A.’s most important cost-containment measures,” and said that by curbing the growth of health insurance costs, it could have the effect of allowing for more wage increases.

“Unfortunately a lot of what Congress has been doing in recent years seems to be ignoring the budgetary consequences,” he said. “The general question is, what’s the overall deficit picture? The answer is, it’s not as good as it should be and we shouldn’t be making it worse.”

But for Democrats, a key constituency is demanding repeal — organized labor. For decades, unions found it easier to bargain for richer benefits than higher wages, producing labor-sponsored health plans that now could face the tax.

On Monday, the A.F.L.-C.I.O., which represents more than 12 million workers, sent a letter to House members saying the tax was “driving employers to hollow out the health care benefits they provide, making medical care less affordable and creating serious access barriers for millions of workers.”

The letter, written by William Samuel, the union’s director of government affairs, warned that workers would face increasing out-of-pocket costs as their employers reduced benefits to avoid being subject to the tax. It also questioned the premise, used in projections of the tax’s budgetary impact, that employers would increase wages after the tax compelled them to reduce benefits.

“Even when workers are represented by union negotiators,” Mr. Samuel wrote, “losses in health care coverage do not result in commensurate higher earnings for workers.”

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Senator Martin Heinrich, Democrat of New Mexico, is sponsoring a companion bill in the Senate, which already has 42 co-sponsors, including 21 from each party. Heather Meade, a spokeswoman for the Alliance to Fight the 40, a coalition of corporations, unions, local governments and others that formed in 2015 to fight the tax, said its members remained optimistic that the Senate would vote before the end of the year.

“It is probably the most bipartisan stand-alone vote that we have seen in 2019,” she said of the House vote. “So we think that will send a really strong message to the Senate. A bipartisan win that both sides can take home.”

She said the coalition has been making the case that fear of the tax has been driving employers to already make their health plans less generous, and has played a major role in the steady rise in deductibles that workers have faced in recent years.

Critics of the tax have also emphasized that it would not just affect the wealthiest workers with the most gold-plated health plans, a point backed by a recent analysis by the Kaiser Family Foundation.

The analysis estimated that the Cadillac tax would affect 21 percent of employers that offer health benefits when it takes effect in 2022, unless employers change their health plans, rising to 37 percent in 2030. In 2022, the health plans costing more than $11,200 for an individual worker’s coverage and $30,100 for family coverage would trigger the tax, according to the analysis.

“It is likely many such employers would modify their plans to avoid the tax — for example, offering lower-cost plans, raising deductibles or otherwise shifting costs to workers to avoid the threshold,” the authors of the analysis wrote.

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