Nearly 100 Experts Warn Against Cadillac Tax Repeal

Today, a group of nearly 100 distinguished health and economic policy experts from across the ideological spectrum joined together to warn the Senate against repealing the "Cadillac tax" on high-cost health plans without an adequate replacement. The Cadillac tax is one of the few tools under current law to limit the growth of private health costs, and analysis has shown repealing it would increase health spending, slow wage growth, and expand the budget deficit.

The letter was delivered to Leaders McConnell and Schumer this morning and is available below:

The Honorable Mitch McConnell                                                             

Majority Leader                                                                   

United States Senate                                                            

The Honorable Charles Schumer

Minority Leader

United States Senate

For decades, economists and health policy experts of all political persuasions have agreed that the unlimited exclusion of employer-financed health insurance from income and payroll taxes is inflationary, inefficient, and regressive. The Affordable Care Act established the Cadillac tax to address these issues.

The Cadillac tax will help curtail the growth of private health insurance premiums by encouraging employers to limit the costs of plans to the tax-free amount. The excise tax will discourage the provision of insurance that covers such a large proportion of health care spending that consumers have little incentive to insist on cost-effective care and providers have little incentive to provide it. As employers redesign health insurance plans to hold costs within the tax-free amount, cash wages or other fringe benefits will increase. Furthermore, repealing the Cadillac tax would add directly to the federal budget deficit, an estimated $197 billion over the next decade according to the Joint Committee on Taxation.

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.

But we unite in urging Congress to take no action to weaken, delay, or reduce the Cadillac tax until and unless it enacts an alternative tax change that would more effectively curtail cost growth.

Sincerely,

	Henry Aaron	Brookings Institution
	Loren Adler	Brookings Institution
	David Yves Albouy	University of Illinois
	Joseph Antos	American Enterprise Institute
	Aviva Aron-Dine	Center on Budget and Policy Priorities
	Alan Auerbach	University of California
	Martin Baily	Brookings Institution
	Laurence Baker	Stanford University
	Ernst Berndt	Massachusetts Institute of Technology
	Robert Bixby	Concord Coalition
	Barry Bosworth	Brookings Institution
	Alex Brill	American Enterprise Institute
	Gary Burtless	Brookings Institution
	Stuart Butler	Brookings Institution
	Kate Bundorf	Stanford University
	James C. Capretta	American Enterprise Institute
	Amitabh Chandra	Harvard University
	Michael Chernew	Harvard University
	Barry Clendenin	George Mason University
	David Cutler	Harvard University
	Patricia Danzon	University of Pennsylvania
	Angus Deaton	Princeton University
	Peter Diamond	Massachusetts Institute of Technology
	Avi Dor	George Washington University
	Mark Duggan	Stanford University
	Douglas Elmendorf	Harvard University
	Ezekiel Emanuel	University of Pennsylvania
	Yevgeniy Feyman	Boston University
	Matthew Fiedler	Brookings Institution
	Robert Fellner	Nevada Policy Research Institute
	Austin Frakt	Boston University
	Jason Furman	Harvard University
	William Gale	Brookings Institution
	Martin Gaynor	Carnegie Mellon University
	Paul Ginsburg	University of Southern California
	Sherry Glied	New York University
	Marc Goldwein	Committee for a Responsible Federal Budget
	Joshua Gotbaum	Brookings Institution
	Gordon Gray	American Action Forum
	Jonathan Gruber	Massachusetts Institute of Technology
	Holly Harvey	Committee for a Responsible Federal Budget
	Ron Haskins	Brookings Institution
	Tara O’Neill Hayes	American Action Forum
	Christopher Holt	American Action Forum
	Doug Holtz-Eakin	American Action Forum
	Jill Horwitz	University of California
	Robert Huckman	Harvard University
	Paul Hughes-Cromwick	Altarum Institute
	Robert P. Inman	University of Pennsylvania
	Benedic Ippolito	American Enterprise Institute
	Damon Jones	University of Chicago
	Helen Levy	University of Michigan
	Frank Levy	Massachusetts Institute of Technology
	Steven Lieberman	Brookings Institution
	Robert Litan
	Erzo Luttmer	Dartmouth College
	Maya MacGuineas	Committee for a Responsible Federal Budget
	Eric Maskin	Harvard University
	Aparna Mathur	American Enterprise Institute
	Thomas McGuire	Harvard University
	Ellen Meara	Dartmouth College
	David Meltzer	University of Chicago
	Bruce Meyer	University of Chicago
	John McDonough	Harvard University
	Cecilia Munoz
	Len Nichols	George Mason University
	Maurice Obstfeld	University of California
	Michael O'Hanlon	Brookings Institution
	Harold Pollack	University of Chicago
	Daniel Polsky	John Hopkins University
	Robert Pozen	Massachusetts Institute of Technology
	Robert Reischauer	Urban Institute
	Ben Ritz	Progressive Policy Institute
	Christina Romer	University of California
	Avik Roy	Foundation for Research on Equal Opportunity
	Christopher Ruhm	University of Virginia
	Andrew Samwick	Dartmouth University
	Isabel Sawhill	Brookings Institution
	Douglas Shackelford	University of North Carolina
	Sita Slavov	George Mason University
	Neeraj Sood	University of Southern California
	Eugene Steuerle	Urban Institute
	Betsey Stevenson	University of Michigan
	Michael Strain	American Enterprise Institute
	Katherine Swartz	Harvard University
	John Taylor	Stanford University
	Richard Thaler	University of Chicago
	Grace-Marie Turner	Galen Institute
	Ani Turner	Altarum
	Laura Tyson	University of California
	Stan Veuger	American Enterprise Institute
	Alan Viard	American Enterprise Institute
	Paul Van de Water	Center on Budget and Policy Priorities
	Gail Wilensky	Project HOPE
	Roberton Williams	University of Maryland
	Kyle Wingfield	Georgia Public Policy Foundation
	Justin Wolfers	University of Michigan
	Richard Zeckhauser	Harvard University

*Organization affiliations are listed for identification purposes only.

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