Raise the Hue and Cry against the Cadillac Tax

Ask not for whom it tolls, it tolls for thee.

What is the Cadillac Tax? It’s a federal excise on “excessive” workplace health benefits that takes effect in 2018. The initial thresholds, above which the tax applies, are health benefits valued at $10,200 for an individual and $27,500 for a family. But the tax is designed so those thresholds effectively drop over time. As I wrote recently at U.S. News, we should kill this tax because it threatens the employer-sponsored health benefits enjoyed by half the U.S. population.

Do not ask for whom the Cadillac Tax tolls, it tolls for thee.

A recent report by the Kaiser Family Foundation predicts nearly 25 percent of workplace health plans will be hit by the Cadillac Tax in its first year (2018), and more than 50 percent by its eighth year (2025). A study by Towers Watson predicts a higher figure: 80 percent.

Because employers can avoid the tax by shrinking or dropping health benefits, it’s a safe bet that most will do so rather than pay the tax. Tens of millions of Americans will lose their health plan—more than 160 million, if the employer-based system disappears, as I would expect it to do, absent a policy change.

One of the main reasons we should fight the Cadillac Tax is that it splits and embarrass the Democrats (unions versus single-payer fans), going into the 2016 elections. Forcing the Left to debate the future of the Cadillac Tax in this election will put pressure on the press to explain the tax to voters. Voters, in turn—when they wake up to the looming threat—will put pressure on candidates to do something to protect their health benefits. Which in turn will generate a “must pass” legislative vehicle to which other needed health care reforms can be attached.

That will be our opening to enact patient-centered health care reforms.

Thanks to this tax, Obamacare’s negative effects are finally going to start hitting home with voters in a way that it never has before. When Obamacare threatens my neighbor, that’s sad. When Obamacare threatens me, that’s war. The Cadillac Tax is the first part of Obamacare that actually threatens most Americans where they live.

Let’s alert them to that fact before they go to the polls.

Sound the alarm!

Dean F. Clancy, a former senior official in the White House and Congress, writes on U.S. budget, health care, and constitutional issues. Follow him on Twitter: @DeanClancy.

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