Anti-Labor "Cadillac tax" Repealed in Senate

Senate Votes to Repeal Anti-Union 'Cadillac tax"'

By Peter Sullivan - 12/03/15 03:44 PM EST

The Senate voted overwhelmingly on Thursday to repeal the “Cadillac tax” on high-cost health plans, a rare area of bipartisan agreement around the healthcare law.

But the Senate did show support for repealing the tax. Both Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Democratic Leader Harry Reid (D-Nev.) voted for the amendment. Seven Democrats, including Sen. Dick Durbin (Ill.), the No. 3 Democrat, and three Republicans voted against it. 

There are currently ongoing talks to include a repeal or delay of the Cadillac tax in a separate package of tax breaks, known as tax extenders, that is expected to move before the end of the year.

The major question is the White House, which has defended the tax as a check on health cost growth and a source of funding for ObamaCare. Repealing the tax would take roughly $90 billion away from the law over 10 years. It is unclear what compromise, if any, the White House might agree to.

Sen. Dean Heller (R-Nev.), sponsor of the repeal bill, noted its broad support on Thursday ahead of the amendment vote.

“There is no opposition to this legislation,” he said. “The unions support this amendment, the Chamber [of Commerce] supports this amendment, seniors support this amendment.”

Opponents of the tax warn that employers will increase the deductibles and other out of pocket expenses that employees have to pay in a bid to avoid hitting the tax. The 40 percent tax hits plans with costs that exceed $10,200 for individuals or $27,500 for families.  

Defenders of the tax, like the White House, argue that it gives employers an incentive to support payment reforms and efficiencies to bring down the cost of healthcare, and that to a certain extent increased cost-sharing from employees, giving them an incentive to seek out more efficient, lower-cost care.