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AFSCME Supports Repeal of Regressive Tax on Health Benefits

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By AFSCME Staff Explore the Issues Health Care

AFSCME President Lee Saunders last week applauded the House of Representatives for voting to repeal a regressive health tax that is set to go into effect in 2022 and would make it harder for working families to afford quality health care.

The tax, which is part of the Affordable Care Act (ACA), levies a 40% tax on the most expensive employer-sponsored health insurance plans. It was always unpopular among many groups, including business groups and labor unions.

The so-called “Cadillac tax” was designed to hold down soaring health care costs and help pay for the law’s benefits, but last week the House voted almost unanimously to repeal it. As President Saunders pointed out, the tax is already hurting working families.

“Although this tax does not take effect for another 2 ½ years, it is already forcing employers to reduce worker and retiree health benefits – raising medical copays, deductibles and other out-of-pocket health expenses,” he said. “It is also hurting AFSCME members and public service workers who are negotiating contracts that will extend into or beyond 2022. Working families are struggling to afford health care and millions still live without coverage. Congress needs to be working on solutions to bring down costs, not raise them.”

The vote on the Middle Class Health Benefits Tax Repeal Act of 2019, sponsored by Connecticut Rep. Joe Courtney, was 419 to 6. AFSCME urges the Senate to follow the House’s lead and vote to repeal this burdensome health tax.