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Business Groups' Poll Finds Public Upset with 'Cadillac Tax'

By Eliza Newlin Carney, CQ Roll Call

October 21, 2015 -- Business leaders stepped up their pressure on Congress to repeal the health care law's excise tax on high-cost employer plans, releasing a poll Wednesday concluding that most voters say the tax will "harm the quality of health care."

"There are many flaws with the Affordable Care Act, but I think the employee benefits tax is perhaps the most ironic of the flaws," said Joe Trauger, vice president of human resources policy for the National Association of Manufacturers. "The same law that makes employer-sponsored coverage more expensive imposes a tax on coverage because it's expensive. Clearly that's not good policy."

Trauger made his comments on a Wednesday press call with representatives from the Business Roundtable and the U.S. Chamber of Commerce to release the results of a voter survey on the tax. Popularly known as the "Cadillac tax" because it would impose a 40 percent excise tax on high-cost employer health plans, it was authorized by the law (PL 111-148, PL 111-152) as a way to control burgeoning health care costs.

The trade groups' survey found that 44 percent of voters are unable to correctly identify the tax, but also concluded that 48 percent of respondents said after learning about the tax that it should be repealed. The survey also found that nearly one in two voters–45 percent—say that their health care is "less affordable" than it was before the law's enactment.

The tax is not slated to take effect until 2018, but employers are already configuring their health offerings for 2016 and 2017, said Maria Ghazal, vice president and counsel for the Business Roundtable. If the tax winds up touching preventive care and employer-run wellness programs, she said, it will undermine efforts to prevent chronic disease and reduce health costs in the long run.

Employers do need to get a handle on rising costs, acknowledged Randy Johnson, the U.S. Chamber's senior vice president for labor, immigration and employee benefits. But he said there are other ways to cut costs than imposing what he called a "crazy" tax.

"It's a false choice to say that the only way to control costs on this is to have a 40 percent excise tax," said Johnson. "It's like throwing the baby out with the bathwater."

Defending The Tax

The Obama administration has defended the tax, and 101 economists from leading think tanks and universities wrote to Capitol Hill earlier this month to urge Congress "to take no action to weaken, delay or reduce the Cadillac tax unless it enacts an alternative tax change that would more effectively curtail cost growth."

But a strange-bedfellows coalition that includes labor organizations, insurance companies and some of the nation's largest employers, from Dow Chemical to General Motors and Wal-Mart, is lobbying aggressively against the tax.

Two coalitions are ginning up grassroots pressure on Capitol Hill—the business-led National Coalition on Benefits, and a diverse umbrella group known as the Alliance to Fight the 40, which includes labor leaders, insurers and Fortune 500 companies.

Bipartisan legislation to repeal the tax has been introduced in both chambers, and a budget reconciliation bill headed to the House floor as soon as this week would repeal several parts of the health care law, including the 40 percent excise tax on employer insurance plans. The latter is the most likely legislative vehicle for Congress to try to repeal the tax in the near term.

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