Megan McArdle | Obamacare’s Cadillac Tax Will Not Survive

Megan McArdle, Bloomberg:

The Cadillac tax may not be quite dead yet. But at best, it certainly stuns easily. I’m not optimistic.

The Cadillac tax, you may remember, was an excise tax on especially expensive employer-sponsored health insurance plans. It was a substitute for two things the administration wanted to do, but didn’t quite dare: get rid of the tax deduction for employer-sponsored insurance, and institute serious cost control measures. Doing either of those things would have made an already-embattled Obamacare bill impossible to pass into law.

So instead, the administration came up with a Rube Goldberg mechanism that sort of capped the tax deduction, and sort of encouraged private insurers to control costs — and, not incidentally, raised a substantial amount of money, helping the administration toward the politically necessary claim that the law would reduce the deficit.


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