Contrary to widespread belief, conservatives should support Cadillac Tax repeal – Washington Examiner

The House of Representatives this week will vote on H.R. 748, the Middle Class Health Benefits Tax Repeal Act of 2019. It is expected to pass the House by a wide, bipartisan margin.

H.R. 748 repeals the so-called “Cadillac Plan tax,” one of the big tax hikes that paid for Obamacare. The Cadillac Plan tax imposes a 40% excise tax on very expensive health insurance policies. The tax was meant to be a sort of proxy for limiting the tax benefit for employer-provided health insurance (for example, labor union plans and those in high-regulation states), to the extent the coverage is on the outer margins of cost. The tax has never gone into effect, and is currently delayed until 2022.

Some conservatives have said this de facto cap on employer-provided health insurance is worth preserving — a rare area of overlap between liberal and conservative health policy experts.

This analysis is wrong.

First, there is a fairly obvious point to be made from a conservative perspective. Any time Speaker Nancy Pelosi puts a tax cut on the floor of the House, conservatives should say “yes, Ma’am.” When said tax cut is also a partial repeal of Obamacare, we should say, “Hell, yes, Ma’am.” Sometimes in Washington, things are that simple. Lower taxes are a good thing, and a rare one from far-left House Majority.

It’s encouraging that House Democrats have opted to repeal one of the biggest tax hikes of Obamacare. They are choosing to kill it without an offsetting tax increase — something Republicans have advocated for many years.

House Democrats ought to consider adding a few other Obamacare tax repeals to this bill. The Senate Republican majority, for its part, should add on bipartisan Obamacare tax repeals to H.R. 748 and send it back to the House for quick dispatch to President Trump.

There are three widely bipartisan Obamacare taxes that could be added to Cadillac Plan tax repeal. They are an excise tax on medical devices like pacemakers and breast pumps, an excise tax on health insurance premiums, and a repeal of a “medicine cabinet tax” on over-the-counter prescription medicines. These, too, should attract supermajorities in both chambers.

Other candidates here include ending the employer mandate, uncapping flexible spending account contribution limits, making the high medical bills tax deduction parameters permanent, and repealing the infamous “tanning tax.”

Using this golden opportunity of Cadillac Plan tax repeal to also rescind a few (perhaps many) other Obamacare taxes is part and parcel of the conservative promise to repeal Obamacare. Congress has already repealed both the CLASS Act and the 1099-MISC small business paperwork tax reporting provision, and has zeroed out the hated Obamacare individual mandate. On the regulatory front, the Trump administration has given states the ability to restructure Obamacare and Medicaid using waiver authority, has expanded health reimbursement arrangements, association health plans, and short-term limited duration plans, and has in general reformed Obamacare as best they could. We need to keep taking every opportunity here to repeal and replace Obamacare.

It’s also important to frame this week’s vote in terms of opposition to the extreme “Medicare for all” plans presidential campaign Democrats and socialist congressional Democrats like Alexandria Ocasio-Cortez support. Democrats who endorse “Medicare for all” or a government-option health insurance plan really want to take away employer-provided health insurance from the 150 million Americans who have it and like it. Repealing the Cadillac Plan tax helps protect that insurance and makes “Medicare for all” that much more difficult to enact. Even Joe Biden, who this week endorsed a government option plan, supports an idea which will crowd out and eventually eliminate private sector health insurance.

My organization, the Center for a Free Economy, is part of a federation of groups opposed to “Medicare for all.” The alliance, spearheaded by the American Conservative Union, is called the “Coalition Against Socialized Medicine.” Cadillac Plan tax repeal is consistent with this mission.

My friends in the conservative movement’s health and tax wings probably think I have lost my mind. After all, we all have agreed for years that moving from employer to individual healthcare is the way to advance free-market healthcare policy. I still believe that. But that isn’t the choice right now. The choice is not private sector employer-provided insurance vs. private sector individual insurance (would that it were so). The choice between now and Election Day, rather, is between private health insurance and government health insurance. It’s that simple.

Besides, I would remind my friends in the movement that the Cadillac Plan tax has never gone into effect, and was likely never going to go into effect. That should tell us something about the political feasibility of going after the employer-sponsored private sector health insurance benefit. If our ultimate goal is to make health insurance portable and flexible, we need to do it while accommodating the strong desire of most families to keep the insurance they like.

Conservatives need to not look a gift horse in the mouth here. Take the win. Repeal one of the biggest Obamacare taxes. Senate Majority Leader Mitch McConnell should turn it into an Obamacare tax repeal Christmas tree.

Ryan Ellis (@RyanLEllis) is president of the Center for a Free Economy.