Brief The ACA's "Cadillac" Tax Versus a Cap on the Tax Exclusion of Employer-Based Health Benefits: Is This a Battle Worth Fighting?
Linda J. Blumberg, John Holahan, Gordon B. Mermin
Display Date
Download Report
(7.44 MB)

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).

Research Areas Health and health care Taxes and budgets
Tags Health insurance Federal health care reform Health equity Private insurance Individual taxes Federal budget and economy
Policy Centers Health Policy Center Urban-Brookings Tax Policy Center