|Congress Votes to Repeal Cadillac Tax and HIT|
The House and Senate passed the fiscal year 2020 spending bill and companion tax extenders measure this past week, which includes a permanent repeal of three ACA taxes: the Cadillac Tax, medical device tax and Health Insurance Tax (HIT). The legislation fully repeals the Cadillac Tax and repeals the HIT effective January 1, 2021, which means the HIT will still be in place for 2020. The repeal of these taxes represents a big win for the healthcare industry. NAHU and its coalition partners have lobbied intensely against the Cadillac Tax and HIT since they were first mandated by the Affordable Care Act.|
Lawmakers split the 12 spending bills into two packages, the four-bill security-themed HR 1158 and eight-bill HR 1865, to avoid the optics of an omnibus bill, as President Trump vowed never to sign an omnibus again after doing so in March 2018. Despite the expedited nature of the year-end spending deal, President Trump has indicated that he will sign the two bills before midnight on December 20, when government funding expires.
The HIT and medical device tax have been implemented intermittently over the past few years, but the Cadillac Tax was set to take effect in 2022 after delays were signed into law in December 2015 and January 2018. This past summer, the House voted overwhelmingly in favor of H.R. 748 which called for a permanent repeal of the Cadillac Tax. Last week, Senate Minority Leader Chuck Schumer pushed for a full repeal of the tax to be included in the spending deal, as the Senate companion bill to H.R. 748 was able to garner 63 co-sponsors. According to the Congressional Budget Office, repeal of the Cadillac Tax and HIT will be a huge boon to consumers. Consumers will save close to $197 billion with repeal of the Cadillac Tax and $150 billion with repeal of the HIT.
In addition, the spending package also contains other prominent health provisions. The deal would end the Administration’s ability to block the practice of “silver loading.” Since the elimination of funding for cost-sharing reduction (CSR) payments, insurance companies have utilized the practice of silver loading by adding costs onto silver-tiered insurance plans offered on the exchanges which are tied to tax credits that help consumers afford their premiums. The ACA uses the premiums for silver-level plans to determine the amount of federal subsidies available to individuals with annual incomes below 400% of FPL and when premiums for silver plans increase, federal subsidies rise along with them.
Congress also extended Medicaid block grant funding to the U.S. territories for two years in the spending deal and bars the Administration from preventing automatic reenrollment in plans purchased on the individual exchange if a consumer does not select a plan during open enrollment. Moreover, Congress also included a provision that makes it easier for generic drug companies to develop lower-cost competing products to brand-name drugs to help pay for the end of year package. It is projected to save close to $4 billion over the next 10 years.
NAHU commends members of Congress from both sides of the aisle who advanced this sweeping package. Passage of this legislation represents a major milestone in our advocacy efforts to finally end the Cadillac Tax and HIT and we thank all of you who have taken action to support these repeals. Please take a minute to send a message to your Representatives thanking them for voting yes on permanent repeal of the Cadillac tax and HIT through this Operation Shout!
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