Analysis: Repeal of ObamaCare taxes in bipartisan spending deal costs $373B

The repeal of three ObamaCare taxes in the bipartisan government funding deal poised to pass Congress this week will deprive the government of $373.3 billion over 10 years, according to a nonpartisan analysis. 

The analysis released Tuesday by Congress’s Joint Committee on Taxation, the companion of the Congressional Budget Office, analyzed the cost of repealing three taxes that were passed in ObamaCare as a way to help fund the law’s coverage expansion. 

The bipartisan year-end spending deal includes repeal of the 40 percent tax on generous “Cadillac” health insurance plans, the 2.3 percent medical device tax, and the Health Insurance Tax. Those repeals cost $197 billion, $25.5 billion and $150.8 billion respectively, over 10 years, the committee estimated. 

The repeal of those taxes is a major win for the health insurance industry and the medical device industry, which had lobbied for years against them. 

Lawmakers in both parties have also opposed the taxes, and they were repeatedly suspended in the past. None are currently in effect, but were poised to come back in the near future.  

The Cadillac Tax was intended to both raise revenue to pay for ObamaCare and help lower health care spending by incentivizing employers to lower costs to avoid hitting the tax. But unions and employers both objected to having to pay a tax on their health plans, galvanizing bipartisan opposition in Congress. 

Some health economists and experts lamented the repeal of the tax, though. Repeal of all three taxes is also not paid for. 

“At a moment when policymakers should focus on reducing health costs and raising revenues to expand health coverage, this legislation repeals an important cost-reducing measure and sacrifices hundreds of billions of dollars in revenue,” wrote Robert Greenstein, president of the left-leaning Center on Budget and Policy Priorities. 

Democratic congressional leaders have long pushed for repealing the Cadillac Tax. 

Speaker Nancy Pelosi (D-Calif.), in a statement on the funding deal on Monday, said that “Democrats are protecting the quality, affordable health care of millions by permanently repealing health care taxes,” while also noting the funding deal separately blocks President Trump from taking certain actions to “sabotage” ObamaCare. 

The Alliance to Fight the 40, a group of employers, insurers and others opposed to the Cadillac Tax, said “working families have been facing higher costs and shrinking coverage from this looming tax.”

Backers of repealing the Health Insurance Tax said it was passed along to consumers in the form of higher premiums, and supporters of repealing the medical device tax said it hindered innovation from small medical device companies. 

Brian Riedl, a senior fellow at the right-leaning Manhattan Institute, wrote on Twitter that the repeal of such major funding sources for ObamaCare exposes “the fraud that ObamaCare was fiscally responsible and ‘fully paid for.’ ”