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Congress Hits Brakes on ‘Cadillac’
By Sarah Sipek
From Workforce Management on Wednesday, February 10, 2016
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“A delay will give Congress and the administration more time to evaluate the impact of the tax and address the potentially negative consequences in terms of reduced benefits, job losses and declines in personal income,” said Steve Wojcik, vice president of public policy at the National Business Group on Health, in a written statement.

According to a recent Kaiser Family Foundation analysis, about 1 in 4 employers are expected to offer health plans in 2018 that are expensive enough to trigger the tax. After that, the tax’s reach is expected to expand quickly because it is tied to the rate of inflation, and insurance premiums have been growing more rapidly than that rate. This means more and more health plans will be ensnared as time goes on, Wojcik said.

A recent NBGH survey of 140 large corporations found that almost 48 percent of respondents expect at least one of their benefit plans will hit the excise tax threshold in 2018 if they don’t take measures to control rising health care costs. By 2020, 72 percent expect one of their plans will trigger the tax.

As a result, many employers are offering lower-priced health plans that shift more of the rising cost of health care onto employees. Congress’ action to delay the tax calls into question whether taxing employers is the best way to control health care spending, Wojcik said.

While the delay does give employers more time to adjust plans and stay under the tax, the NBGH and other organizations hope that Congress addresses the root problem of health care inflation and finds a more effective solution.

“This is really a demand-side tool to control health care spending,” Wojcik said.