October 1, 2015
The Honorable Orrin G. Hatch
Chairman
Committee on Finance
United States Senate
The Honorable Ron Wyden
Ranking Member
Committee on Finance
United States Senate
The Honorable Paul D. Ryan
Chairman
Committee on Ways and Means
U.S. House of Representatives
The Honorable Sander M. Levin
Ranking Member
Committee on Ways and Means
U.S. House of Representatives
Dear Chairman Hatch, Senator Wyden, Chairman Ryan, and Congressman Levin:
For decades economists and health policy experts of all political persuasions have agreed that the
unlimited exclusion of employer-financed health insurance from income and payroll taxes is
economically inefficient and regressive. The Affordable Care Act established an excise tax on highcost health plans (the so-called ‘Cadillac tax’) to address these issues.
The Cadillac tax will help curtail the growth of private health insurance premiums by encouraging
employers to limit the costs of plans to the tax-free amount. The excise tax will discourage the
provision of insurance that covers such a large proportion of health care spending that consumers
have little incentive to insist on cost-effective care and providers have little incentive to provide
it. As employers redesign health insurance plans to hold costs within the tax-free amount, cash
wages or other fringe benefits will increase. Furthermore, repealing the Cadillac tax would add
directly to the federal budget deficit, an estimated $91 billion over the next decade according to the
Joint Committee on Taxation.
We, the undersigned health economists and policy analysts, hold widely varying views on other
provisions of the Affordable Care Act, and we recognize that measures other than the Cadillac tax
could have been used to restrict the open-ended health insurance tax break.
But, we unite in urging Congress to take no action to weaken, delay, or reduce the Cadillac tax
until and unless it enacts an alternative tax change that would more effectively curtail cost growth.
Sincerely,
Henry Aaron
Jason Abaluck
David Albouy
Joseph Antos
Alan Auerbach
Nikhil Agarwal
Laurence Baker
Brookings Institution
Yale University
University of Illinois
American Enterprise Institute
University of California
Massachusetts Institute of Technology
Stanford University
Martin Baily
Ernst Berndt
Linda Blumberg
Thomas Buchmueller
M. Kate Bundorf
Leonard Burman
Gary Burtless
Stuart Butler
Amitabh Chandra
Michael Chernew
Julie Berry Cullen
David Cutler
Leemore Dafny
Patricia Danzon
Angus Deaton
Brad DeLong
Peter Diamond
Avi Dor
Bryan Dowd
Mark Duggan
Susan Dynarski
David Ellwood
Douglas Elmendorf
Ezekiel Emanuel
Michael Frakes
Austin Frakt
John Friedman
Donald Fullerton
William Gale
Martin Gaynor
Paul Ginsburg
Sherry Glied
Lawrence Goulder
Jonathan Gruber
Gautam Gowrisankaran
Ben Handel
Ron Haskins
Kate Ho
John Holahan
Jill Horwitz
Hilary Hoynes
Robert Huckman
Robert Inman
Damon Jones
Lawrence Katz
Melissa Kearney
Jenny Kenney
Jonathan Kolstad
Brookings Institution
Massachusetts Institute of Technology
Urban Institute
University of Michigan
Stanford University
Urban Institute
Brookings Institution
Brookings Institution
Harvard University
Harvard University
University of California
Harvard University
Northwestern University
University of Pennsylvania
Princeton University
University of California
Massachusetts Institute of Technology
George Washington University
University of Minnesota
Stanford University
University of Michigan
Harvard University
Brookings Institution
University of Pennsylvania
Northwestern University
Boston University
Brown University
University of Illinois
Brookings Institution
Carnegie Mellon University
University of Southern California
New York University
Stanford University
Massachusetts Institute of Technology
University of Arizona
University of California
Brookings Institution
Columbia University
Urban Institute
University of California
University of California
Harvard University
University of Pennsylvania
University of Chicago
Harvard University
University of Maryland and Brookings Institution
Urban Institute
University of California
Darius Lakdawalla
Robin Lee
Arik Levinson
Frank Levy
Helen Levy
Erzo F.P. Luttmer
Pinar Karaca Mandic
Eric Maskin
Thomas McGuire
Ellen Meara
David Meltzer
Bruce Meyer
Marilyn Moon
Fiona Scott Morton
Adriana Lleras-Muney
Alicia Munnell
Len Nichols
Kavita Patel
Mark Pauly
Harold Pollack
Daniel Polsky
James Rebitzer
Robert Reischauer
Alice Mitchell Rivlin
Christopher Ruhm
Andrew Samwick
Douglas Shackelford
Louise Sheiner
Kosali Simon
Kent Smetters
Neeray Sood
Mark Stabile
Amanda Starc
Eugene Steuerle
Katherine Swartz
Richard Thaler
Robert Town
Paul Van de Water
Tom Vogl
Kevin Volpp
Gail Wilensky
Roberton Williams
David Wise
Justin Wolfers
Richard Zeckhauser
Stephen Zuckerman
University of Southern California
Harvard University
Georgetown University
Massachusetts Institute of Technology (emeritus)
University of Michigan
Dartmouth College
University of Minnesota
Harvard University
Harvard University
Dartmouth College
University of Chicago
University of Chicago
American Institutes for Research
Yale University
University of California
Boston College
George Mason University
Brookings Institution
University of Pennsylvania
University of Chicago
University of Pennsylvania
Boston University
Urban Institute
Brookings Institution
University of Virginia
Dartmouth College
University of North Carolina
Brookings Institution
Indiana University
University of Pennsylvania
University of Southern California
University of Toronto
University of Pennsylvania
Urban Institute
Harvard University
University of Chicago
University of Pennsylvania
Center on Budget and Policy Priorities
Princeton University
University of Pennsylvania
Project HOPE
University of Maryland
Harvard University
University of Michigan
Harvard University
Urban Institute