House Republican leaders are considering a repeal of the controversial “Cadillac tax” on high cost health plans. Rep. Kevin Brady (R-TX), chairman of the Health Subcommittee said that he expects a bill repealing certain healthcare taxes to be on the congressional agenda following the August recess.
The Cadillac tax is a 40% tax on high-cost health plans that was implemented by the Obama administration, which has stood behind the tax and would likely not support its repeal. The administration has stated that the Cadillac tax is needed to slow growth in health care costs. Elimination of the tax would create a $90 billion hole in the federal budget.
However, the tax is highly unpopular and the idea of repeal has gained traction from certain Affordable Care Act (ACA) supporters such as Senator Chris Murphy (D-Conn). It is possible that Congress will be able to repeal the Cadillac tax, but such a bill would likely encounter a veto from President Obama. Additionally, any bill that seeks to repeal the tax will likely be accompanied by more comprehensive healthcare tax reform, which may garner the support of a far narrower section of Congress. Republicans in the House have made clear that a number of healthcare related taxes are “in the mix” of items the party is hoping to eliminate after the August recess.
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