Democratic leaders Nancy Pelosi and Harry Reid have been talking with President Obama about axing the Cadillac tax in Obamacare, The Hill reports. The 40 percent excise tax on high-quality, high-cost health plans has remained unpopular since it was devised, and has been a bipartisan priority to repeal.
With just two months left in the year, sources say the most ideal option for Democrats is attaching repeal to the package known as tax extenders. The cost of the extenders bill is typically not offset, making it an attractive vehicle for ending one of ObamaCare's biggest revenue generators.
Reid and Pelosi have not settled on a plan and are leaving their options open, the aide said, adding that the work on ending the tax could carry over into next year. […]
The tax on high-cost insurance plans is at the heart of Obama's strategy to contain costs across the marketplace. Health officials and economists close to the law are dead set against abandoning the tax, which they argue should nudge employers and employees toward cheaper insurance plans with less waste.
The theory is that cheaper plans mean patients seek less healthcare and that drives costs down. Of course, things like reining in pharmaceutical companies could create some significant savings, as well, but this was relatively easier, politically speaking. Labor has opposed it from the beginning, and has been fighting since to have it dropped. Unions negotiate these very high-quality health plans often in lieu of higher salaries.
The wonks argue that putting the high tax on these plans will discourage employers from offering them, and will encourage them to give their workers higher salaries instead. To which the worker population of the nation—and other economists—say, "fat chance." Larry Mishel,of the labor-allied Economic Policy Institute (EPI) is among those voices. He told David Dayen that he is "dubious that in the current economic context that the things being done to lower premiums is resulting in higher wages to offset them. […] No evidence speaks to all this."
Hillary Clinton has come out in opposition to it as has Bernie Sanders, and he has enough Senate Democrats with him to help Republicans nix it, if they choose to do so. The one thing that might save it is just how much Democrats want it to go away. Republican leadership sure won't want to do anything that Democrats like.