The ACA's "Cadillac" Tax Versus a Cap on the Tax Exclusion of Employer-Based Health Benefits: Is This a Battle Worth Fighting?

Brief

The ACA's "Cadillac" Tax Versus a Cap on the Tax Exclusion of Employer-Based Health Benefits: Is This a Battle Worth Fighting?

Abstract

Opposition to the ACA’s “Cadillac” tax is growing. This excise tax applies to employer health benefits exceeding a threshold. There has been broader support over time for a cap on the tax exclusion of employer contributions to health insurance, including from many who now want to repeal the Cadillac tax. We show that the distributional effects of the excise tax and a cap on the exclusion are similar, except when firms choose to pay the excise tax instead of reducing benefits to avoid it (very few employers are expected to leave benefits at prior levels and pay the tax).

To reuse content from Urban Institute, visit copyright.com, search for the publications, choose from a list of licenses, and complete the transaction.

LATEST IN Health and Health Policy

To reuse content from Urban Institute, visit copyright.com, search for the publications, choose from a list of licenses, and complete the transaction.