The Affordable Care Act (ACA) is as partisan an issue as any has ever been. After barely passing Congress in 2010, it has since garnered almost 50 repeal votes of one kind or another from Congress and two major court challenges, nearly all failed. With the very rare exception, the past five years have seen very few changes to a law that desperately needs to be improved, even though there are issues that both sides of the aisle agree should be changed, such as the medical device tax and the so-called Cadillac Tax. At the NAM, we call it the Employee Benefits Tax (EBT), because that’s what it is – a tax on worker’s benefits.
Many Democrats and Republicans recognize that the EBT is bad policy and poorly conceived. The tax was designed to encourage employers that offer high value plans – $10,200 for an individual and $27,500 for a family – to curb their health care costs. While the perception is that these thresholds are arrived at by calculating the premium cost of the plan, the law captures more than just premiums. Once the IRS completes the regulatory process and we have final regulations to implement the tax, it will require employers to count the value of things like on-site medical clinics, on-site pharmacies, wellness programs, flexible spending accounts, and other common benefits outside the actual premium amounts. The Kaiser Family Foundation estimates that almost half of employers will have at least one plan subject to the tax in the first year it takes effect. Unless the EBT is repealed, Congress and the Federal government are actively encouraging employers to cut benefits to their employees.
Two pieces of legislation in the House and one in the Senate would repeal the tax. The House bills were introduced by Representatives Frank Guinta (R-NH) and Joe Courtney(D-CT) separately, but achieve the same end. In total they have over 230 cosponsors. The Senate legislation was introduced by Senators Dean Heller (NV) and Senator Martin Heinrich (D-NM) today and the NAM will be working to ensure there is robust support in the Senate too. As it stands, we have another rare occurrence in the nearly five and a half years since the law was signed – both sides realize there is something wrong and that it needs to be fixed.
The NAM and our member companies still believe the ACA is not an example of good healthcare policy, but employers must comply with the law – imperfect as it is, with numerous legal and regulatory issues, such as mandatory minimum benefits, unstable state exchanges, vast reporting and paperwork requirements, and increasingly limited options. Despite all its flaws, the ACA is the law of the land and we must find a way to make sure it doesn’t negatively impact the more than 150 million people who receive health benefits through their employer. One of the best things Congress can do to prevent the erosion of employer-sponsored coverage is to repeal the Employee Benefits Tax.
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