How ‘Repeal-And-Replace’ Legislation Could Increase The Deficit

Even if the Congressional Budget Office releases an estimate early next week claiming that the Senate Obamacare discussion draft reduces the deficit, the legislation could well end up increasing the deficit. That’s because the bill repeals most of the law’s taxes, but leaves one in place—for the moment. Under the discussion draft, Obamacare’s “Cadillac tax” on high-cost health plans would return in 2026.

The New York Times noted earlier this week that Republicans intend to offer an amendment to eliminate the tax outright. If an outright repeal of the “Cadillac tax” receives more than 60 votes in the Senate—as it has before—that would mean the legislation could (and likely would) increase the deficit in the long term, while still passing through budget reconciliation measures on a simple majority vote.

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