Bernie Sanders and Senate Democrats Introduce Bill to Repeal Tax on 'Cadillac' Health Plans

Presidential candidate Sen. Bernie Sanders, I-Vt., along with Sen. Sherrod Brown, D-Ohio, and seven of their Democratic colleagues in the Senate, have introduced legislation to repeal a tax on so-called “Cadillac” health plans.

Sanders noted that he opposed the provision when it was included in the Affordable Care Act, which was passed in 2010.

“What was true then is true now,” Sanders said in a statement Thursday. “Imposing an excise tax on health insurance plans would be a disaster for millions of middle class Americans. Some have said that this tax only falls on ‘Cadillac’ health care plans, but the reality is that the plans this bill will tax are more like Chevrolets. Workers have fought hard to negotiate decent healthcare benefits, often in exchange for lower pay. This excise tax unfairly punishes them. The tax not only punishes hard working Americans, it is simply bad policy.  We should make sure that all Americans receive affordable, high quality health care.”

The Affordable Care Act imposes a 40 percent non-deductible excise tax on health plans with values exceeding $10,200 in coverage for individuals and $27,500 for families. The provision is indexed to inflation and will rise automatically over time, with the potential to eventually affect all employer-sponsored plans.  
The bill would strike the excise tax while demanding that repeal be paid for. According to the Congressional Budget Office, this provision would generate $87 billion over 10 years. Sanders contends the revenue should instead be raised through a surtax on the wealthiest people in this country, a provision that was included in the House version of the ACA. At the time, that provision was estimated to raise $460 billion over 10 years, more than five times the amount raised by the excise tax.

Sens. Patrick Leahy, D-Vt., Mazie Hirono, D-Hawaii, Jeanne Shaheen, D-N.H., Chris Murphy, D-Conn., Richard Blumenthal, D-Conn., Chuck Schumer, D-N.Y., Michael Bennet, D-Colo., Bob Casey, D-Pa., Tammy Baldwin, D-Wis., and Al Franken, D-Minn., are cosponsors of the legislation.

The Cadillac tax is facing broad opposition on both the right and left. Earlier this month, a Republican and a Democratic senator introduced a bipartisan bill to repeal the Cadillac tax, Senators Dean Heller, R-Nev., and Martin Heinrich, D-N.M., as a companion bill to one introduced by Rep. Joe Courtney, D-Conn., in the House (see Bipartisan Senators Raise Pressure on Obamacare Cadillac Tax). Similar legislation has also been introduced in the House by Rep. Frank Guinta, R-N.H. A recent report from the Kaiser Family Foundation estimates that the share of employers potentially affected by the tax could grow significantly over time—to 30 percent in 2023 and 42 percent in 2028—if their plans remain unchanged and health benefit costs increase at expected rates (see 1 in 4 Employers Could be Subject to ‘Cadillac Plan’ Tax).

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