Most of the ACA focused on increasing the number of American's with access to health care, but the Cadillac Tax (aka Excise Tax) has a dual purpose. First the obvious, it helps pay for the expansion of coverage. It's expected to raise 87 billion. It's also expected that employers will shift benefit dollars into wages and that people will lose deductions for health care expenses that will raise another 202 billion.
When I last blogged about the Cadillac Tax, I didn't understand this last item. It's noted in the Congressional Office Budget Report as "other which consists mainly of the effects of changes in taxable compensation on revenues." As I was reading the most recent IRS Notice, it clicked. The ACA isn't just banking on the revenue from the tax which most employers are planning to avoid, it's banking on the increased revenue that will come from the moves employers take to avoid the tax that result in increased taxable income to Americans. For example, if an employer eliminates and FSA that an employee has been putting $2,500 a year into that $2,500 becomes taxable income.