PROVIDENCE, R.I. (WPRI) – Congressmen Jim Langevin and David Cicilline are generally viewed as strong supporters of President Obama’s health law. But they’re now openly opposed to one key policy that’s supposed to help pay for it.
The two Democrats have both signed on to legislation sponsored by Congressman Joe Courtney, D-Connecticut, that would repeal the so-called “Cadillac tax” included in the 2010 law that became known as Obamacare. Starting in 2018, health plans that cost more than $10,200 for an individual or $27,500 for a family would face an excise tax of 40% on the amount above those thresholds.
“The tax was intended to be a disincentive for employers to provide overly rich health benefits, and the cost of the health plan is one measure of the level of benefits,” according to the Kaiser Family Foundation, a health research group. “However, some plans may cost more because they cover people with higher-than-average health care costs, including retirees, older workers and workers in high-risk occupations.”
Rhode Islanders could feel the pinch of the Cadillac tax even if their own health plans don’t top the threshold, since the state and many municipalities offer their workers and retirees generous health benefits. The state has already disclosed to bondholders that it expects to have to pay the tax on health plans for its retirees.
Langevin voted for the Cadillac tax when he backed the health law in 2010. Now, however, he has signed onto Courtney’s effort to repeal the tax, which also has strong support from some labor unions and business groups.
“While the original intent of this excise tax was to curb increasing health care costs, it could have an unintended and damaging effect on working families and on employers, both of whom want affordable, comprehensive health benefits,” Langevin told WPRI.com in a statement. He called the policy a “potentially costly and burdensome tax on Americans’ health care plans.”
Cicilline didn’t enter Congress until 2011, so he didn’t cast a vote on Obamacare during the original debate over the law, though he has strongly supported it since. But he, too, wants to scrap the Cadillac tax.
“The Cadillac tax will disproportionately impact Rhode Island’s working families, women, and small businesses,” Cicilline told WPRI.com in a statement. “I am proud to be an original co-sponsor of Congressman Courtney’s legislation to repeal the Cadillac tax before it goes into effect and makes health care more expensive for working men and women.”
Repealing the Cadillac tax would be costly: the tax is expected to generate $87 billion to offset the cost of Obamacare’s insurance subsidies through 2025, according to the Congressional Budget Office. Some critics of the law suggested when it was being drafted that the Cadillac tax was political window-dressing that made the law look cheaper on paper but wouldn’t be allowed to take effect once 2018 rolled around.
Like Langevin, both of Rhode Island’s U.S. senators – Jack Reed and Sheldon Whitehouse – voted for the health law in 2010. But unlike their House colleague, so far at least the two senators haven’t flip-flopped on the Cadillac tax.
Chip Unruh, a spokesman for Reed, issued a terse statement that left the senator’s options open when asked about the tax. “The IRS recently began the rule-making process for tax on so-called ‘Cadillac’ health plans, so Senator Reed will continue to monitor the issue,” he said.
Seth Larson, a spokesman for Whitehouse, was more expansive, perhaps reflecting the senator’s long-stated interest in pursuing measures that would hold down the rising cost of health care.
“Senator Whitehouse has always said he is open to looking at ways to improve the Affordable Care Act, but to the extent significant changes are made to its funding mechanisms they generally should be offset by other sources of revenue,” Larson said. “That’s the general litmus test he would apply when evaluating any such proposals.”
A White House spokesman had not responded Wednesday morning to a request for comment on whether President Obama still stands by the Cadillac tax.Ted Nesi (email@example.com) covers politics and the economy for WPRI.com. He hosts Executive Suite and writes the Nesi’s Notes blog. Follow him on Twitter: @tednesi