• Why repeal the Cadillac tax when you can just delay it?

    This is a TIE-U post associated with Nick Bagley’s Health Reform and Its Legal Controversies (Michigan Law 866, Fall 2015). For related posts, see the course intro.

    Apart from health economists and Jeb Bush, no one likes the Cadillac tax. Yes, it’s probably the part of the ACA that holds most promise at slowing the rate of health-care spending growth. It puts the “Affordable” in the Affordable Care Act, if anything does. But the tax is wildly unpopular across the political spectrum. Even Hillary Clinton, an ardent supporter of the ACA, has endorsed its repeal.

    Why bother repealing it, though, when you can just delay it? Back in July 2013, the administration announced that it would provide one year of “transition relief” from the employer mandate. “In our ongoing discussions with businesses we have heard that you need the time to get this right,” the administration said. “We are listening.”

    Later that year, the administration again delayed key provisions of the ACA. When a number of out-of-compliance health plans issued cancellation letters to their enrollees, President Obama was accused of violating his oft-repeated claim that “if you like your health care plan, you can keep it.” To quell the controversy and forestall congressional action, the Obama administration announced that certain existing health plans “will not be considered to be out of compliance with the market reforms” for at least another year.

    In my judgment, neither of these moves was legal. But they still happened. And they serve as precedents for future presidential action. Under the ACA, the Cadillac tax doesn’t go into effect until 2018. What if, in 2017, President Clinton decided to provide a year or two of transition relief? “In our ongoing discussions with unions we have heard that you need time to get this right,” she could write. “We are listening.”

    To be clear, this kind of delay wasn’t legal in 2013, it’s not legal now, and it wouldn’t be legal in 2017. But, as I warned a year ago, “a future administration that is less sympathetic to the ACA could invoke the delays as precedent for declining to enforce other provisions that it dislikes, including provisions that are essential to the proper functioning of the law.”

    I had in mind a Republican administration. But President Clinton would suffice.

    @nicholas_bagley

    Share
    Comments closed