Congress to delay ACA's 'Cadillac' tax on pricey health plans

WASHINGTON - A decision by Congress to defer a new tax on expensive employer health plans would cost the government an estimated $9 billion and have a potent symbolic effect as the first major change that lawmakers have made to the Affordable Care Act since its passage.

The two-year postponement in what has been dubbed the "Cadillac tax," because it applies to high-priced insurance, is the most significant of three changes to ACA taxes that are woven into a sprawling budget package on which the House and Senate are preparing to vote within the next few days.

The legislation would suspend temporarily both of the other taxes, which already have begun. It would lift for two years a tax on medical devices and create a one-year moratorium in 2017 on a tax levied on all private health insurance. These elements are victories for parts of the health insurance industry that had coalesced to help pass the ACA in 2010. Since then, they have been trying to reverse some provisions that are onerous for them and that they say ultimately burden consumers.

Delaying the start of the Cadillac tax is widely regarded as the most important move because of the political dynamic that led to its inclusion in the deal and its potential impact on the U.S. health-care system. The White House opposes any repeal of this tax. Press secretary Josh Earnest reiterated that stance on Wednesday but said a two-year wait delay in its start would be "meager." Meanwhile, some leading opponents of the tax said they would continue to press for it to be rescinded altogether.

The tax, currently scheduled to start in 2018, is intended to rein in high-priced insurance policies offered through employers by placing a 40 percent tax on the portion of benefits exceeding certain price thresholds. Under the new agreement, the tax would be postponed until 2020.

For a law that has stoked acrid partisanship before its enactment five years ago and ever since, dislike of the Cadillac tax stands out as a rare point of agreement between Republicans and many Democrats - though their reasons differ. GOP lawmakers are eager to kill the tax as part of their overall disdain for the health-care law and their preference for lower taxes in general. The Democrats opposing the tax are sympathetic to major labor unions, which have been striving to eliminate it because some members have generous health benefits that they fear would be weakened.

All three Democrats who are running for president have embraced the idea of repealing the Cadillac tax, not just deferring it. The Republicans favor abolishing the ACA.