Two ObamaCare taxes likely to be repealed in year-end funding deal

A year-end government funding package is likely to include repeal of ObamaCare’s Cadillac Tax and medical device tax, according to sources familiar with the talks.

The move would mark a final blow to two taxes that were originally passed in the Affordable Care Act to help fund the law’s coverage expansion, but that have been repeatedly delayed and criticized by lawmakers in both parties.{mosads}

A final deal on the package, set to pass Congress this week, has not yet been announced, but sources say the ObamaCare tax repeals are likely to be included. The fate of a third tax in the law, the Health Insurance Tax, remained uncertain.

The Cadillac Tax, a 40 percent levy on generous health-insurance plans, was intended to help drive down health care spending by incentivizing employers to lower costs to avoid getting hit by the tax.

But the tax drew strong opposition from both employers and unions, who did not want their health plans to be taxed, setting up a broad coalition in both parties against the idea, which was repeatedly delayed and has never gone into effect. It is currently slated to take effect in 2022, if it is not repealed.

Many health economists warn repealing the tax will take away an important lever for driving down health care costs. It will also deprive the government of the hefty sum of about $200 billion over 10 years, the Congressional Budget Office said earlier this year.

The 2.3 percent tax on medical devices likewise drew bipartisan opposition from lawmakers who warned it harmed innovation by hitting small medical device companies, though in general medical device tax repeal is more of a priority for Republicans and Cadillac Tax repeal for Democrats. But repeal would cost about $25 billion over 10 years, according to the CBO.

Senate Minority Leader Charles Schumer (D-N.Y.) pushed for repeal of the Cadillac Tax in this year-end package. 

Former President Obama was one of the few high-profile defenders of the Cadillac Tax, at times putting him at odds with Democratic leadership in Congress. With Obama out of the White House, though, the path is clearer for full repeal of the tax.