Issue Position: Repeal the Excise Tax on Middle Class Health Benefits

Issue Position

On April 28th, 2015, Congressman Joe Courtney (CT-2) unveiled new legislation that would repeal the excise tax on high-cost health insurance plans scheduled to go into effect in 2018. Also known as the "Cadillac tax," the policy would apply a 40 percent tax on health insurance expenditures over $10,200 per person and $27,500 per family. The excise tax was established in a later version of the Affordable Care Act, but its scheduled implementation was delayed five years by an effort led by Courtney with 191 House colleagues in 2010. Studies of the policy have indicated that it will have a disproportionate and rapidly increasing impact on older workers, women, and workers in high-cost regions.

Economists and actuaries from the Economic Policy Institute, TowersWatson and Milliman, the consulting firm, have projected that the tax would unfairly impact older workers, women, and--most disproportionately--workers living in high-cost areas, including the Northeast. A recent Milliman study reported that nearly 70 percent of variance in health insurance premiums is explained by geographic location, while just six percent of variance is due to the comprehensiveness of the benefits. Since the excise tax is determined solely by premium cost--not the quality or "richness" of a plan's benefits--it will unfairly impact older workers, women, and people who live in areas where health care costs are high.

Courtney's bill, the Middle Class Health Benefits Tax Repeal Act, would repeal the excise tax, protecting workers, families, and employers from this unnecessary burden. The bill has more than 70 bipartisan co-sponsors in the House of Representatives, and has earned endorsements from business, labor, and health policy advocates.

Courtney Announces New Legislation to Repeal Excise Tax, Protect Workers' Health Benefits
WASHINGTON--Today, Congressman Joe Courtney (CT-2) unveiled new legislation that would repeal the excise tax on high-cost health insurance plans scheduled to go into effect in 2018.

Background on the Middle Class Health Benefits Tax Repeal Act

Although the tax does not go into effect until 2018, employers are already changing plans and reducing benefits today. Uncertainly over how the tax will be implemented, as well as shortcomings in the law with regards to adjustments for inflation, age, gender and other factors, are leading employers to consider and in many cases already implement a range of options to avoid the tax by reducing the value of health care coverage, which could include increasing deductibles, copays, coinsurance and out-of-pocket limits.

Business, Labor Agree: Repeal the Excise Tax

Congressman Joe Courtney's legislation, the Middle Class Health Benefits Tax Repeal Act, has earned the endorsement of more than 30 business, labor, and health groups:
More than 40 Business, Labor and Health Organizations have endorsed Courtney's legislation

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