House OKs Cadillac Tax Delay, Renewed CHIP Funds

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House OKs Cadillac Tax Delay, Renewed CHIP Funds
Calendar19 January 2018

Last night’s House approval of a short-term government spending bill was due in part to support for provisions added by Republican leaders to delay the Cadillac tax and other ACA taxes and reauthorize the Children’s Health Insurance Program (CHIP) for six years. While the bill’s Senate prospects are grim for other reasons and leave lawmakers without a clear path for avoiding a partial government shutdown this weekend, inclusion of the health care items suggest they could be part of whatever deal Congress can ultimately reach.

The spending bill as currently written would delay implementation of the Cadillac tax on “high cost” plans from 2020 to 2022. It would also halt the law’s medical device tax for 2018 and 2019. The ACA’s health insurance, or “HIT” tax would be suspended for 2019. The 2.3% tax on medical devices, which industry groups strongly oppose, was reinstated this year, as was the health insurance tax.

The proposed delay of the Cadillac tax comes as especially good news for the broad coalition of employer and labor groups (including Mercer) advocating for repeal. Republicans until now had appeared reluctant to address the Cadillac tax as part of efforts to delay or repeal the two other ACA taxes, which were viewed as more urgent.

CHIP, which provides health coverage to nearly nine million low-income children, is supported by Republicans and Democrats, but the parties have been at odds over whether its funding must be made up by spending cuts elsewhere instead of added to the federal deficit.

These health care sweeteners probably won’t rescue the spending bill from Senate Democrats’ dissatisfaction over its failure to address immigration issues, but their approval by the House bodes well for enactment in the not-too-distant future. Republicans may also try to tack on additional health care items to future must-pass legislation, including easing current restrictions on health savings accounts (HSAs).

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