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In the heat of the legislative fight over the Affordable Care Act, Obama administration officials argued that including a steep tax on high-cost, generous health insurance plans was critical to the law because it would hold down soaring costs while helping to pay for its expanded health benefits. On Wednesday, that feature, once considered central to Obamacare, was dealt a blow by an unlikely foe: Democrats. (Goodnough, 7/17)

The so-called "Cadillac tax" never went into effect, since lawmakers kept delaying it. Wednesday's 419-6 vote increases chances that the Senate will follow the House, going for full repeal. Beginning in 2022, the tax would slap a 40% levy on the value of health insurance plans above $11,200 for single coverage and $30,100 for family policies. The idea was to help control costs by putting a brake on the value of health insurance plans. To avoid the tax, insurers and employers might have to shift more costs to policyholders. (7/17)

Democrats, many of whom grudgingly supported the cost containment effort as part of the landmark health care law nine years ago, argued Wednesday it would be a de facto tax on working families. “Today, we’ll honor our promise to the hard-working men and women of the labor as we lift the Cadillac tax protecting health benefits that workers have negotiated,” House Speaker Nancy Pelosi said on Wednesday. (Abutaleb, 7/17)

At first glance, it seems odd for House Democrats to pass a roughly $200 billion tax cut that removes an ACA plank. It is a tax cut without the revenue-raising offsets Democrats say they favor, and it is a strike against Obamacare while Democrats defend the law. But the Cadillac tax has always been different. Many House Democrats opposed it as the ACA was written. They won concessions to scale it back and then helped delay it so it didn’t start as scheduled in 2018. “I’ve been working on this since it first popped its head up,” said Rep. Joe Courtney (D., Conn.), the bill’s sponsor. “The most noticeable change in the environment is just the extraordinary outpouring of support for repealing the tax from a much more diverse group of people.” (Rubin and Armour, 7/17)

Repealing the tax will cost the government the hefty sum of $196.9 billion over 10 years, according to the nonpartisan Congressional Budget Office. “After a decade of fiercely debating the merits of the Affordable Care Act, I hope we have turned a corner today and can now focus on strengthening the parts of the law that work in the manner we'd intended and changing the parts of the law — which is not unusual — that we believe could be improved,” said House Ways and Means Committee Chairman Richard Neal (D-Mass.), praising the bill. (Sullivan, 7/17)

The tax “has a strong policy rationale,” wrote Paul Van de Water, senior fellow at the Center on Budget and Policy Priorities, a Washington think tank. “In fact, it’s one of the ACA’s most important cost-containment measures. It will discourage employers and employees from buying unusually high-cost health coverage that promotes the excess use of health care.” Repealing it would also cause the U.S. to lose a “substantial amount of money and add to our deficit,” he added in an interview with CNBC. (Lovelace, 7/17)

Unions, employer groups and insurers who have fought the tax from the beginning are driving momentum for congressional repeal. Insurers have warned for years that costs for people in the employer market would climb if the tax ever took effect. America's Health Insurance Plans welcomed the House vote as a "bipartisan solution to bring down health care premiums and costs." (Luthi, 7/17)

Steve Wojcik, vice president for public policy at the National Business Group on Health, said the repeal would remove uncertainty for employers planning future insurance coverage for their workers, a process that for large employers often spans two years. “It'd be good to have a lot of certainty that this is no longer looming over this process for employer plans and employees,” he told CQ Roll Call. “It would add costs for both employers and employees.” (McIntire, 7/17)

Rep. Joe Courtney scored a win Wednesday after a decade of trying to repeal a tax on expensive health care plans that was imposed by the Affordable Care Act. The House voted overwhelmingly, 419-6, to approve Courtney’s Middle Class Health Benefits Tax Repeal Act of 2019, which would abolish a tax imposed by the Affordable Care Act. (Radelat, 7/17)