Cadillac tax opponents seek compromise in repeal effort

Opponents of the Cadillac tax now say they are willing to compromise in their effort to repeal the controversial provision of the Affordable Care Act.

Rather than eliminating the tax completely, they've suggested the idea of exempting the contributions that are made to employers' health savings accounts, which could otherwise be subject to the 40 percent excise tax on high-cost health plans, according to an article in The Hill

Industry and employer groups have come together to fight the Cadillac tax, saying that it reduces incentives for employees to establish savings that may help with healthcare and retirement. The issue is becoming a focal point in the presidential election, with candidates such as Hillary Clinton coming out against the tax.

But one of the biggest issues with a Cadillac tax repeal is figuring out how to replace the funding it would provide, since the tax would pay for many ACA provisions, according to the article.

"I think that while there is an overwhelming agreement that something must be done on the Cadillac tax, there is also the political reality that full repeal is going to be very difficult to do," Bill Sweetnam, legislative director for the Employers Council on Flexible Compensation, tells The Hill. "There's a political aspect in this that I don't think we'll be able to get over in the short term."

Economists generally favor the Cadillac tax, noting that implementing the tax would bring in an estimated $91 billion to federal coffers over a decade. To prepare for the effects of the tax, some employers are increasing their plans' deductibles, eliminating covered services and switching to less expensive and narrower provider networks. 

To learn more:
- read The Hill article