Rep. Kelly Op-Ed Calls for Full Repeal of Harmful ‘Cadillac Tax’ on American Workers

Apr 24, 2018

WASHINGTON — U.S. Representative Mike Kelly (R-PA) – a member of the House Ways and Means Committee – authored a guest opinion piece published today by The Hill in which he describes the damage being caused by the controversial “Cadillac Tax” provision within the Affordable Care Act (Obamacare) and argues for Congress to permanently repeal it.

Time to junk the ‘Cadillac Tax’ for good

By Rep. Mike Kelly

There is no denying that the historic enactment of the Tax Cuts and Jobs Act is having a profound effect on American life, from bigger paychecks for millions of workers to a more competitive economic environment for businesses of all shapes and sizes to thrive. Still, one particularly taxing issue – no pun intended – remains unresolved.

The crossroads where tax reform meets health care reform is a provision within the Affordable Care Act known as the “Cadillac Tax,” a 40 percent excise tax on employer-sponsored health insurance plans that will unfairly force employers to reduce health benefits for their employees, causing out-of-pocket costs to skyrocket and choices to dwindle.

Its name comes from the delusion that only those with the most luxurious “Cadillac” plans will be taxed. In truth, the Joint Committee on Taxation estimates that nearly all employer-sponsored health plans will be hit. With 178 million Americans receiving employer-sponsored health coverage – half of our country! – the tax’s impact will be widespread and downright devastating.

As the owner of a family-operated car dealership in Butler, I have firsthand knowledge about not only selling Cadillacs but also running a successful business made possible by dozens of dedicated associates. Trust me: this Cadillac Tax has nothing to do with fancy cars or extravagant health plans — it has everything to do with punishing hardworking Americans and their families.

By taxing the benefits that employers generously offer their employees to help keep them healthy and financially secure, this tax needlessly cuts into ever-tightening family budgets while making health care less accessible. The damage has already begun.

Americans from coast to coast are already seeing rising deductibles, growing co-payments, and fewer doctor options as their employers are painfully forced to narrow networks and slash other benefits to avoid being smothered by a 40 percent tax. In the Keystone State, where 55 percent of our workforce is covered by employer-sponsored health insurance, the Cadillac Tax will hurt 6,663,200 Pennsylvanians — including working men and women, children, and retirees.

As we know it, the employer-sponsored health care system is stable, efficient, and effective in covering more than half of all Americans. Employers are on the cutting edge of innovation, leveraging new technologies and systems to reduce health care costs and produce better outcomes. The Cadillac Tax threatens this time-tested system as it would lead many employers to forgo investments in the health care solutions of tomorrow.

For good reason, its implementation has been delayed by Congress multiple times, and it will not take full effect until 2022. But despite the delay, employers are already making incremental benefit cuts to avoid shocking changes for their employees before the tax kicks in. Unfortunately, because the tax is calculated based only on insurance premiums, it cruelly targets those already struggling with higher health care costs, which means women, older and sicker workers, and those who live in high-cost areas are hit first and hardest.

A policy this dangerous deserves more than delay — it should be permanently deleted. Fortunately, that’s a majority opinion.

A bipartisan bill I introduced last year would repeal the Cadillac Tax immediately – before it can fully ravage Americans’ wallets and well-being – and is currently co-sponsored by more than 250 members of the House of Representatives. The tax is so odious that, even in these divisive times, many of the most liberal Democrats and conservative Republicans have found common ground in fiercely opposing it. Outside of government, it has similarly united labor unions and the business community. When both the AFL-CIO and the Chamber of Commerce agree to fight something, you know it’s bad!

With the Cadillac Tax already picking the pockets of American workers and disrupting the employee-employer relationship, and with overwhelmingly popular support for getting rid of it, there is simply no good reason to keep it on the books. None.

Congress must repeal this tax if we are serious about making the economy stronger and fairer for hardworking Americans and their families. If allowed to linger, even in delay, the Cadillac Tax could quickly undo and outweigh nearly all the benefits of our hard-earned, long-sought victory on tax reform.

Sensible health care policy should encourage employers to offer the fullest range of plans to their associates, not punish them with an unfair tax for doing so. No more excuses, nor delay: before it taxes tens of millions of citizens out of their health care coverage, the Cadillac Tax should be sent straight to the junkyard.

NOTE: Rep. Kelly is a member of the House Ways and Means Subcommittee on Health and the lead sponsor of the Middle Class Health Benefits Tax Repeal Act of 2017 (H.R. 173), which he introduced in the House of Representatives on January 3, 2017. The Senate companion (S. 58) was introduced by Sen. Dean Heller (R-NV) on January 9, 2017.

###