Improve, Don’t Repeal, ObamaCare’s Cadillac Tax

Congress has twice delayed the Cadillac Tax—originally set to take effect in 2018—and weakened it by allowing employers to deduct the levy itself from their profits. But repealing the Cadillac tax is a bad idea. Instead, Congress should modify it to encourage the use of health savings accounts. It would be better to shift the tax advantage toward HSAs and away from third-party payment—especially high-cost employer-sponsored insurance—to encourage consumers to shop around and assess what’s worth the cost. This would give employees greater control over their health spending and reduce the incentive to overconsume care in the mistaken belief that someone else is paying for it.