The 'biggest threat yet' to Obamacare could soon be carried out by Democrats

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What's Next for Affordable Care Act?

One of the signature provisions of the Affordable Care Act is on the chopping block. And it's largely due to President Barack Obama's fellow Democrats.

Congressional negotiators are close to agreement on a sweeping budget deal that would keep the government funded through next September. One of the provisions included in the deal is "likely" to be a two-year delay in the implementation of the "Cadillac tax," according to a senior Democratic aide.

A delay of the tax, which isn't scheduled to be implemented until 2018 anyway, wouldn't necessarily represent a threat to the law itself. Coverage expansion, both through federal and state-based insurance marketplaces, and through the federal Medicaid program, could go on without the tax.

But the tax's delay could potentially pose a significant problem for one of Obamacare's main goals: constraining healthcare costs in the US.

RELATED: Click through for behind-the-scenes photos of the president during his tenure

44 behind-the-scenes images of Barack Obama's tenure as president
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The 'biggest threat yet' to Obamacare could soon be carried out by Democrats
White House photographer Pete Souza took this photo of President-elect Barack Obama moments before Obama took the oath of office. (Photo by Pete Souza/The White House)

President Obama and first lady Michelle Obama shared a moment at the Inaugural Ball on January 20, 2009. (Photo by Pete Souza/The White House)

The next day, Obama entered the Oval Office to begin his first full day as America's 44th president. (Photo by Pete Souza/The White House)

Obama reads a letter that former President George W. Bush left for him in the Oval Office's resolute desk. Leaving a letter for the incoming president has become a White House tradition. (Photo by Pete Souza/The White House)

Obama toured the White House grounds with curator William Allman, chief usher Adm. Stephen Rochon, and presidential personal aide Reggie Love. (Photo by Pete Souza/The White House)

Here's a photo of Obama meeting with senior advisers in the Oval Office during the third week of his presidency. (Photo by Pete Souza/The White House)

Wearing an embroidered crew jacket, Obama waited for the first of many flights aboard Air Force One. (Photo by Pete Souza/The White House)

Obama gave his first State of the Union address on February 24, 2009. (Photo by Pete Souza/The White House)

The Obamas walked to Marine One on the South Lawn before heading off on one of their first trips to Camp David. (Photo by Pete Souza/The White House)

The Obamas were welcomed by Queen Elizabeth II to Buckingham Palace in London while in town for the G20 summit. (Photo by Pete Souza/The White House)

Obama gave a fist bump to a US soldier while visiting troops at Camp Victory in Iraq on April 7, 2009. (Photo by Pete Souza/The White House)

President Obama and Michelle smiled at each other inside a White House elevator after a Cinco de Mayo celebration. (Photo by Pete Souza/The White House)

Obama and Vice President Joe Biden practiced their putting skills on the White House green. (Photo by Pete Souza/The White House)

Obama tours the Pyramids of Giza in Egypt for the first time during his 11th presidential trip abroad. (Photo by Pete Souza/The White House)

In this July 2009 photo, Obama attended his first G8 summit, which was held in L'Aquila, Italy. (Photo by Pete Souza/The White House)

Over the summer of 2009, Obama visited the Grand Canyon in Arizona. (Photo by Pete Souza/The White House)

Obama laughed at a picture of himself during an interview on the "Late Show with David Letterman." (Photo by Pete Souza/The White House)

The Obamas welcomed children from local schools for Halloween festivities at the White House. (Photo by Pete Souza/The White House)

Obama was applauded by Nobel Committee Chairman Thorbjorn Jagland after receiving the Nobel Peace Prize on December 10, 2009. (AP Photo/Susan Walsh)

The Obamas posed for their first holiday portrait in front of the official White House Christmas tree. (Photo by Pete Souza/The White House)

At the beginning of the new year, White House photographer Pete Souza took this photo of Obama meeting with members of his cabinet. The president's chair is marked with a plaque engraved with his inauguration date. (Photo by Pete Souza/The White House)

The Obamas danced during the Governors' Ball held in the East Room of the White House. (Photo by Pete Souza/The White House)

Obama reads some documents while waiting for Marine One at the Westchester County Airport in New York. (Photo by Pete Souza/The White House)

Obama speaks with a congressman about the healthcare-reform bill. "In those final days before the vote, the President made hundreds of calls," wrote White House photographer Pete Souza. (Photo by Pete Souza/The White House)

Alongside White House staff and Vice President Joe Biden, Obama clapped while watching the historic House vote to pass the Affordable Care Act. (Photo by Pete Souza/The White House)

Obama boarded Air Force One while the sun set at Miami International Airport. (Photo by Pete Souza/The White House)

The Obamas pretended to sing with an a capella group after a holiday tour of the White House. (Photo by Pete Souza/The White House)

"A lighter moment during a meeting in the Situation Room of the White House," Souza wrote. (Photo by Pete Souza/The White House)

Obama shook hands with US soldiers at Bagram Airfield after an all-night, unannounced flight to Afghanistan in December 2010. (Photo by Pete Souza/The White House)

The Obamas stared at Rio de Janeiro's famous Christ the Redeemer statue while visiting Brazil in March 2011. (Photo by Pete Souza/The White House)

Obama saluted a Marine while walking toward Marine One helicopter on the South Lawn of the White House. (Photo by Pete Souza/The White House)

Taken on May 1, 2011, from the White House Situation Room, Obama's national-security team monitored the real-time mission against Osama bin Laden. Souza took approximately 100 photographs during this confidential meeting. (Photo by Pete Souza/The White House)

"The president was ready to announce the news about the mission against Osama bin Laden and was putting the finishing touches on his statement in the Outer Oval Office. As he did so, the networks broke in with bulletins confirming that bin Laden had been killed and a photograph of him appeared on the television screen in the background near the Vice President and Press Secretary Jay Carney," Souza wrote. (Photo by Pete Souza/The White House)

"One of the most memorable moments of the year was when the president hugged Rep. Gabrielle Giffords as he walked onto the floor of the House Chamber at the US Capitol to deliver his annual State of the Union address," Souza wrote in January 2012. Giffords was shot in a 2011 mass shooting in Arizona. (Photo by Pete Souza/The White House)
"The President hugs the first lady after she had introduced him at a campaign event in Davenport, Iowa. The campaign tweeted a similar photo from the campaign photographer on election night and a lot of people thought it was taken on election day," Souza wrote. When the campaign tweeted it on election night, it became the most retweeted photo of all time. (Photo by Pete Souza/The White House)
Obama kissed the first lady for the "kiss cam" during the US men's Olympic basketball team's game against Brazil in Washington, D.C. (Photo by Pete Souza/The White House)

Obama sang "Happy Birthday" to Michelle in the Blue Room of the White House in 2013. Her new hairstyle attracted a lot of attention. (Photo by Pete Souza/The White House)

In this photo, Obama sits in front of cameras taking images that will later make a 3D portrait for the Smithsonian Institution. (Photo by Pete Souza/The White House)

"We were at the NATO Summit in Wales when someone mentioned to the President that Stonehenge wasn't that far away. 'Let's go,' he said. So when the Summit ended, we took a slight detour on the way back to Air Force One," Souza wrote in September 2014. (Photo by Pete Souza/The White House)

Obama laughed as he and Michelle recorded a holiday video message in the Map Room of the White House. (Photo by Pete Souza/The White House)

This March 2015 photo shows Obama delivering remarks during an event to commemorate the 50th Anniversary of Bloody Sunday and the Selma to Montgomery civil-rights marches. (Photo by Pete Souza/The White House)
Obama shook hands with President Raúl Castro of Cuba during the Summit of the Americas on April 11, 2015. The US and Cuba have moved toward a historic thaw in relations over the past year. (Photo by Pete Souza/The White House)
Vice President Joe Biden announced he would not seek the 2016 Democratic presidential nomination in October, as Obama stood by his side during an appearance in the Rose Garden of the White House. (AP Photo/Jacquelyn Martin)

In this November 2015 photo, Obama collects a folder holding the bipartisan Budget Act of 2015 after signing it into law in the Oval Office. (AP Photo/Andrew Harnik)


And opposition to the provision has come from a surprising source: Democrats, as high up as Democratic presidential front-runner Hillary Clinton and Senate Minority Leader Harry Reid (D-Nevada).

Peter Orszag, the former director of the Office of Management and Budget under Obama, argued that for all the attempted pillorying by Republican members of Congress, Democrats are executing the biggest "attack" on the law in its five-plus years in existence.

"A push now under way in Congress to defer or repeal the so-called Cadillac tax is the biggest legislative threat the Affordable Care Act has faced in the past five years. And, weirdly, the lawmakers to blame are Democrats," Orszag wrote in a Bloomberg View column.

In a tweet last week, Orszag called it the "biggest threat" to the law to date:

Tweet Embed:
.@CitizenCohn@JeffYoung agree this is by far biggest threat to ACA to date. Key was to link coverage expansion with cost control (1/2)

Economists and deficit hawks favor the Cadillac tax, as it is projected to raise revenue and lower overall health costs. But it is reviled by just about everyone else — especially labor unions, which represent a major Democratic constituency. It has crept into the presidential campaign, as both top Democratic contenders — Clinton and Sen. Bernie Sanders (I-Vermont) — have called for its repeal.

"This anti-worker tax has got to go," said Harold Schaitberger, the president of the International Association of Firefighters, an influential labor union. "And this delay gives us the room we need to get rid of it once and for all."

Democrats who oppose the provision often argue the tax — a 40% excise tax on employer plans whose premiums exceed $10,200 for individuals and $27,500 for families — is in reality more a tax on most employer-sponsored health plans. Proponents say that over time, employers will likely maneuver around the excise tax by looking for cheaper, more efficient plans with more affordable premiums, thereby providing employees more value in their health plans.

But critics say employers are more likely to shift the costs to workers with higher deductibles, co-payments, and other costs. Labor unions in particular have taken pride in negotiating premium benefits for their workers — and some of those resulting plans would likely be affected by the tax.

"Therein lies the irony," Orszag argued. "Those arguing most forcefully for gutting the Cadillac tax apparently believe it's more important to prevent shifting some costs in the short term than to lower the total cost of health care. Over time, such myopic thinking may well raise, not reduce, out-of-pocket spending."

The White House has fiercely backed the provision of Obamacare, but it has stopped short of saying it would veto budget-deal legislation — which would, in effect, shut down the federal government — that contained a delay.

Part of the reason for the White House's support: According to the Committee for a Responsible Federal Budget, the tax is expected to bring in $87 billion in revenue by 2025. Revenue brought in from the tax is expected to grow exponentially in the years that follow.


Economists and those who have pushed the US to rein in healthcare costs also consider it essential to balance out the cost that comes from one of Obamacare's other major goals: universal health coverage.

The Congressional Research Service has projected that by 2024, the tax would reduce health spending by somewhere between $40 billion and $60 billion.

Earlier this year, 101 health economists signed a letter to key congressional members defending the controversial tax. The letter included names from the administrations of both Republican and Democratic presidents who hold different views on the law as a whole.

Some of the more notable signers of the letter included Jonathan Gruber, the MIT economist and Obamacare architect who came under fire last year for comments he made about the law leading up to its passage; Douglas Elmendorf, the director of the Congressional Budget Office from 2009 until earlier this year; and Ezekiel Emanuel, a senior fellow at the Center for American Progress whose brother, Rahm, was Obama's chief of staff.

"We, the undersigned health economists and policy analysts, hold widely varying views on other provisions of the Affordable Care Act, and we recognize that measures other than the Cadillac tax could have been used to restrict the open-ended health insurance tax break," the economists wrote.

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