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Financial Planning > Tax Planning

Self-insured group head: PPACA Cadillac tax still tough to kill

By Allison Bell

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The cracking you thought you heard in the Democratic defenses for the Patient Protection and Affordable Care Act (PPACA) was probably just the sound of paint chipping.

Michael Ferguson, president of the Self-Insurance Institute of America (SIIA), talked about the defenses today in a telephone interview.

Hillary Clinton, the leading candidate for the 2016 Democratic presidential nomination, and a strong supporter of PPACA, announced Tuesday that she supports repeal of the PPACA “Cadillac plan” tax — a provision that’s set to impose a 40 percent excise tax on the providers of high-cost health insurance benefits packages.

Clinton praised PPACA and praised President Obama. She said savings from other health care system changes she has proposed would cover the cost of eliminating the excise tax. But her announcement means that all three of the main Democratic presidential contenders — Clinton, Bernie Sanders and Martin O’Malley — all favor repealing a well-known part of the PPACA commercial health insurance provisions.

Could the Democratic contenders’ opposition to the Cadillac plan tax be a sign that would-be PPACA changers will have an easier changing PPACA?

Ferguson warned the would-be PPACA changers against assuming that any major changes, including Cadillac plan tax repeal, will have an easy time becoming law.

Even for Cadillac plan tax repeal, “you still don’t have sufficient votes in the Senate to get it through” before the 2016 general elections, Ferguson said.

The White House has said that Obama would repeal a Cadillac plan tax repeal bill. Ferguson said.

The possibility of getting a Cadillac plan tax repeal bill, or a PPACA medical device tax repeal bill, through Congress could increase after the 2016 elections, but only after the elections, Ferguson said.

During the interview, Ferguson also talked about:

  • The financial viability of the state-based PPACA public exchanges. Most of them have used up their federal financing and now have to support themselves, and several appear to be facing severe financial stress, Ferguson said.

  • The financial viability of the PPACA exchanges established by the U.S. Department of Health and Human Services (HHS). State-based exchanges may be able to get cash from their states, but it appears that the only way for the HHS exchange system to get cash is to charge user fees and transfer money from other HHS accounts, Ferguson said.

  • The status of employers’ and plan administrators’ efforts to comply with the new PPACA employee counting and coverage reporting requirements. Ferguson said the SIIA is not yet asking for any specific changes in the counting and reporting rules, and he said plan sponsors and administrators seem to be resigned to the need to come into compliance, even if they dislike the requirements. “That train has probably left the station,” Ferguson said.

See also: Self-Insured Firms Fear Reform Plan

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