The Repeal of the ‘Cadillac Tax’ Showed a Hazard of Bipartisanship

Acting on the principle “Why put it off until tomorrow when you can do the wrong thing today?” the House of Representatives last week voted to repeal the Cadillac Tax, the tax of 40% on a portion of the most lavish employer-provided health care plans. The Cadillac tax was proposed not just to help fund Obamacare but also as an incentive for restraining the rapid growth of health care costs. Because the tax break—treating important compensation as untaxable—is unlimited, Alan D. Viard of the American Enterprise Institute says, it encourages employers to provide high-cost plans “that cover routine care and feature low deductibles and copayments. Those plans increase the demand for medical services and drive up costs for other patients.”