Cadillac Obamacare Schadenfreude

Hey Nan, maybe you should have read it to find out what was in it: Reid, Pelosi pushing for repeal of ObamaCare's 'Cadillac tax'

Senate Minority Leader Harry Reid (D-Nev.) and House Minority Leader Nancy Pelosi (D-Calif.) are working behind the scenes to repeal one of the most controversial taxes in ObamaCare, multiple sources tell The Hill.

Reid and Pelosi have been talking since the spring with President Obama about repealing the “Cadillac tax” on employer healthcare benefits, a senior Democratic aide confirmed on Friday.

“Point is, they both want to get this done,” the Democratic aide said.

Opponents of the 40 percent excise tax on high-cost health plans believe 2015 is their last, best chance to get the provision repealed before presidential politics grind the legislative process to a halt. With just two months left in the year, sources say the most ideal option for Democrats is attaching repeal to the package known as tax extenders. The cost of the extenders bill is typically not offset, making it an attractive vehicle for ending one of ObamaCare’s biggest revenue generators.

Reid and Pelosi have not settled on a plan and are leaving their options open, the aide said, adding that the work on ending the tax could carry over into next year.

“It is clearly a commitment for the Democratic leadership,” AFL-CIO lobbyist Tom Leibfried said in an interview in his downtown office Friday. “We think there’s a real chance to get this done, as big a lift as this is.”

The Cadillac Tax is one of the few ways that Obamacare generates any revenue back to the Feds. It does not have any provision for inflation, so in the long run any employer paid health care is going to run into it. Unions hate it because fat health care benefits was one of the things they have negotiated for, and they're (rightfully) afraid that if they give up the benefit they won't get the equivalent back in salary. Economists love it, and insist it's a really important part of the plan for controlling costs, but all I see it as is a way to kill employee based healthcare. Still, I would not give them the satisfaction. You passed it without any Republican votes, you own it. Now if you want to renegotiate the whole thing, maybe we should have a talk and make sure the Preznit is on board.

Tom Maquire at Just One Minute agrees: End It, Don't Mend It

To the surprise of roughly no one (but do see below), top Dems are now leading the charge to repeal a revenue-raising ObamaCare tax that hits Big Labor health benefit packages:

Senate Minority Leader Harry Reid (D-Nev.) and House Minority Leader Nancy Pelosi (D-Calif.) are working behind the scenes to repeal one of the most controversial taxes in ObamaCare, multiple sources tell The Hill.
Reid and Pelosi have been talking since the spring with President Obama about repealing the “Cadillac tax” on employer healthcare benefits, a senior Democratic aide confirmed on Friday.

Sure, it was helpful and amusing to include that revenue when ObamaCare was being kludged together, but actually letting it bite in 2018?
. . .
For another reminder of the economic case for the Cadillac tax here is Paul Krugman from Jan 2010:

OK, clearly I have to weigh in on this. Should there be a limit to the tax deductibility of employer-provided health insurance, which is what the excise tax in the Senate bill is supposed to fix?
My answer is yes, but the final bill should address the criticisms.
The argument for limiting the tax exclusion is that the tax break on health insurance encourages over-spending, so limiting it could help in the process of “bending the curve”. More generally, since we think the United States spends too much on health for not-so-good results, it makes sense where possible to pay for expanding coverage from the health sector itself. Both arguments are reasonable.

Ooops - time for him to grind the gears and explain why Hillary et al have the right idea with repeal. Hmm, will he blame the obstructionist Koch brothers, Bush, Romney, Trump, or generic crazy right wing ideologues? Gosh, the tough choices facing progressive pundits! We laud their courage in bravely telling their readership exactly what they want to hear.

Medicaid Expansion Is Proving to Be a Bad Bargain for States: New ObamaCare enrollees and costs have exceeded estimates and threaten to swamp budgets.

Recall that the Affordable Care Act was designed to essentially bribe states to expand their Medicaid programs: The feds offered to pay 100% of additional costs through 2016, dropping to 90% by 2020. This “free money” prompted 30 states and the District of Columbia to take the deal. Democratic activists have joined with state hospital lobbies to pressure lawmakers in the remaining 20 state capitals to follow.
. . .
Consider the experience of the states that did expand Medicaid. “At least 14 states have seen new enrollments exceed their original projections, causing at least seven to increase their cost estimates for 2017,” the Associated Press reported in July.

The AP says that California expected 800,000 new enrollees after the state’s 2013 Medicaid expansion, but wound up with 2.3 million. Enrollment outstripped estimates in New Mexico by 44%, Oregon by 73%, and Washington state by more than 100%.

This has blown holes in state budgets. Illinois once projected that its Medicaid expansion would cost the state $573 million for 2017 through 2020. Yet 200,000 more people have enrolled than were expected, and the state has increased its estimated cost for covering each. The new price tag? About $2 billion, according to the Chicago Tribune.

Enrollment overruns in Kentucky forced officials to more than double the anticipated cost of the state’s Medicaid expansion for 2017, the AP reports, to $74 million from $33 million. That figure could rise to $363 million a year by 2021.

In Rhode Island, where one-quarter of the state’s population is now on Medicaid, the program consumes roughly 30% of all state spending, the Providence Journal reports. To plug this growing hole, Rhode Island has levied a 3.5% tax on insurance policies sold through the state’s ObamaCare exchange.

I note that most of the affected states appear to be blue, or at least purple. Democracy in action. Whatever happens, we should not let them put the bill back on the Feds.