When it comes to Obamacare (i.e. the Affordable Care Act, or ACA), Democrats and Republicans haven’t found much to agree upon. That’s why it was particularly notable when bipartisan consensus emerged last year around the need to do something about some of the law’s worst taxes: the medical device tax, the health insurance tax (or “HIT”), and the so-called Cadillac tax, which is a 40 percent tax increase on “high-quality” health benefit plans. Members in both parties said they believed that these taxes at least needed to be delayed from their planned implementation dates, which is why it was so disappointing when legislation did not ultimately pass to do so. The good news is that Congress can still take action on the issue in the upcoming short-term government-funding bill, or CR, that the House plans to consider this week. Congress passing it would take a step in the right direction by allowing the implementation of these taxes to be delayed at various times.
The medical device tax, the health insurance tax, and the Cadillac tax were not designed to last due to their burdens, high cost and complexity. That’s why manufacturers have repeatedly urged Congress for much-needed relief from these job-killing taxes. A recent letter to House and Senate leaders can be found here. Unfortunately, the medical device tax and the HIT went into effect this year but the pressure to delay them did not let up. For the medical device tax, the first collection of the 2.3% tax comes later this month. Also, the HIT comes online in the form of higher health insurance premiums totaling $22 billion for more than 100 million Americans nationwide. Manufacturers are already planning for the 2020 Cadillac tax, with implementation beginning this year.
Manufacturers need certainty to negotiate health plans with affordable premium costs and best-in-class benefits for our employees. Ultimately, that means these taxes need to be repealed entirely. Members in both parties agree. We’ll continue pushing to get that result. But the CR that the House is prepared to vote on this week offers an important solution in the interim. While not a long-term solution for manufacturers or their employees, it is progress that the NAM welcomes. We hope the House and Senate will pass this delay and continue working with us on a long-term solution.