(Bloomberg) — After years of passing on more and more health care costs to employees, companies are slowing their adoption of high-deductible plans next year, according to a survey of more than 100 large U.S. employers.
That relief could be temporary. Companies are waiting to see if lawmakers will repeal the Patient Protection and Affordable Care Act (PPACA) “Cadillac tax” on high-cost health coverage, which is a levy on individual health premiums greater than $10,200. A roll-back would keep employers from having to shift workers into plans where they bear more of the up-front costs of their insurance.
“Because there’s been some momentum around trying to repeal the Cadillac tax, some companies are taking a wait-and-see approach,” said Brian Marcotte, president of the National Business Group on Health (NBGH), which includes companies such as Wal-Mart Stores Inc. (NYSE:WMT), PepsiCo Inc. (NYSE:PEP) and General Motors Co. (NYSE:GM). “If it’s going to go into effect, I think you’ll see another rush in 2017” to put workers in high-deductible plans, said Marcotte, whose group conducted the survey.
Opposition to the tax has united Democrats and their union backers with Republicans and large corporations. It’s tough to repeal, though, because the tax is projected to raise $87 billion over the next decade.
The tax was a key feature of PPACA, designed to bring pressure from employers, workers and commercial health insurers to bear on reducing overall health care costs.
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Economists and federal budget management officials have argued that, because the United States does not tax employer payments for health insurance as income, employers have had an incentive to provide more health insurance, and less wages, than they otherwise would.
The Cadillac plan tax is a 40 percent levy on family plans that cost more than $27,500 and individual plans with premiums above $10,200. It applies only to the portion of the cost that falls above those thresholds, which is tied to inflation.
More than 100 House Democrats and 70 Republicans have signed on to efforts to repeal the tax, and even Democratic presidential candidate Hillary Clinton has signaled that she’d reexamine the provision.
“There’s a sense that at some point between now and 2018, that we’ll try and do something to help ameliorate it,” said Rep. Joe Crowley, D-N.Y.
Opponents say the tax raises the cost of providing health coverage or pushes workers into less-rich plans. Cigna Corp. (NYSE:CI), Pfizer Inc. (NYSE:PFE) and several union groups have joined together in a lobbying group called The Alliance to Fight the 40.