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Hillary Clinton Calls For Eliminating Obamacare’s ‘Cadillac Tax’

MANCHESTER, NH - SEPTEMBER 19: Democratic presidential candidate Hillary Clinton speaks on stage during the New Hampshire Democratic Party Convention at the Verizon Wireless Center on September 19, 2015 in Manchester, New Hampshire. Challenger for the democratic vote Sen. Bernie Sanders (I-VT) has been gaining ground on Clinton in Iowa and New Hampshire. (Photo by Scott Eisen/Getty Images)

Hillary Clinton on Tuesday announced she wants to eliminate the “Cadillac tax,” a key feature of the Affordable Care Act that economists love and pretty much everybody else says they hate.

White House officials, who fought to include the tax in their health care overhaul, won’t be happy about the news, first reported by Maggie Haberman of The New York Times. But many interest groups, particularly labor unions, will be ecstatic. And that probably has a lot to do with why Clinton’s taking this position.

The tax, set to take effect in 2018, is a levy on the most expensive health insurance plans. It is basically an effort to roll back an existing tax break for health insurance, one that’s been around since the middle of the 20th century and that many experts believe contributes to rising health insurance premiums.

As the thinking goes, the existing tax break on health insurance makes a dollar of health insurance worth more than a dollar of income, giving employers and employees alike artificial incentive to spend extra money on health care. The Cadillac tax is basically a roundabout way of undoing at least part of that incentive. Once it takes effect, most economists believe, employers will respond by finding ways to spend less on health insurance — a change employees would see as lower premiums and higher take-home pay.

 

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