Hillary vows to repeal key ObamaCare component: the Cadillac tax

Opposition to ObamaCare isn’t just for Republicans any more, it seems. After five years of lockstep orthodoxy on the brilliance of the Affordable Care Act, the Democrats’ leading contender for the nomination to replace Barack Obama will pledge to repeal one of its main components — the Cadillac tax on high-coverage health insurance plans. The New York Times got the tip from a leader in one key constituency that Hillary Clinton angered last week, and needs to mollify now:

Hillary Rodham Clinton will in the coming days speak out against the so-called Cadillac tax on certain health care plans, a move that is part of a series of reforms she’s suggesting for the Affordable Care Act, according to a union official briefed on her plans.

Mrs. Clinton’s campaign aides informed Randi Weingarten, the president of the American Federation of Teachers, of her intentions in the last few days, according to a senior official with the labor group. The union made an early endorsement of Mrs. Clinton in July.

Many of the union’s members would be affected by the Cadillac tax, which imposes taxes on pricey employer-based coverage plans whose premiums exceed $10,200 a year for individuals and $27,500 for families. The tax is imposed on employers, who can avoid it by reducing benefits to their workers. Its purpose is to help rein in health care costs over all.

Last week, Hillary announced her opposition to the Keystone XL Pipeline project, conveniently timing it for Pope Francis’ tour of the US. Union leaders were none too pleased with this position, but Bernie Sanders isn’t any better on the issue from their perspective. Richard Trumka nevertheless has been under pressure to allow the federation to vote on an endorsement, and last week he opened the door on a vote before the primaries. That could be a bat-signal to another option:

The AFL-CIO is typically reluctant to endorse any presidential candidate early, preferring to wait until someone becomes the de facto Democratic nominee. The only recent exceptions were Al Gore, whom the labor federation endorsed in October 1999, and Walter Mondale, whom it endorsed in October 1983.

But in a breakfast meeting with Washington reporters, Trumka cracked open the door, saying “it is conceivable that” a pre-Iowa or pre-New Hampshire endorsement “could happen.” He then added hastily, “It is not likely.
“The field is wide open,” Trumka said. “There’s a lot of time for things to happen and issues to unfold.” …

Trumka is set to march with Biden in a Labor Day parade in Pittsburgh. “I’m going to Pittsburgh, and he’s going to Pittsburgh, and I’m going to walk with the vice president of the United States,” Trumka said. “People can read into that, or out of that, what they want.” Trumka said he agreed to march in the parade before he knew Biden would also attend.

Regardless, this retreat from a key ObamaCare component is meaningful for more than just the relief it would provide unions. As I write in my column today at The Fiscal Times, the Cadillac tax was not just a revenue source, but the embodiment of one of the ACA’s core efforts at cost control — which turned out to be just as effective as the rest of ObamaCare:

The philosophy of Obamacare is predicated on changing usage patterns and forcing everyone into similar plans. During the Obamacare debate, Democrats argued that Cadillac plans incentivized over-utilization, and that the tax would either force employers to scale back their coverage or the revenue would make up for the excess usage of Cadillac-plan consumers.

As Haberman herself notes in her Times report, the tax was intended as an incentive for employers to “avoid it by reducing benefits to their workers. Its purpose is to help rein in health care costs overall.”

How has that worked out? Just as well as Obamacare, as we have seen in three successive explosions in health-care premium rates. Even though prices skyrocketed for 2014 and 2015 coverage, insurers still underestimated the utilization of their plans under the Obamacare mandate. Delaware announced approval for premium hikes of 22.4 percent, while AIS’ Health Business Daily reported last week to its subscribers on a long list of approvals by states for double-digit premium increases. …

So it’s really no surprise to see Democrats backing away from Obamacare. Voters who have watched their costs skyrocket and received little to nothing in return will not be fooled in 2016 when Democrats try to sell this as a big win for their health, physical or economic, especially since that election will take place immediately after the next series of premium spikes and plan closures will arrive during the 2017 open enrollment period.

Small wonder Hillary feels comfortable backing away from a key component of ObamaCare now. It may not be last retreat we see on it, either.