In a rare moment of bipartisan collaboration, Republicans andDemocrats agreed last year to suspend the implementation of thecontroversial “Cadillac tax” on the most expensivehealth insurance plans for two years.

Intended to go into effect in 2018, the tax will not beimplemented until 2020, assuming Congress does not suspend it againor move to permanently kill it.

The 40% excise tax on health plans worth more than $10,200 forsingle coverage or $27,500 for family coverage was touted by manyeconomists as a way to encourage companies to cut back on healthexpenses and thereby slow down the inflation of national healthcosts. Policymakers have long argued that exempting employee healthbenefits from payroll taxes encourages businesses to shift much oftheir compensation from wages to benefits, which has driven uphealth costs.

Of course, taxing something that was previously untaxed is not apolitical winner. Businesses objected, as did advocates forworkers, including unions that saw generous health benefits as asacred accomplishment produced over decades of tough negotiationswith employers.

In the midst of a presidential campaign season, there were fewin Washington willing to defend the Cadillac tax. The top GOPpresidential candidates opposed it, as did Hillary Clinton andBernie Sanders. As a result, President Obama opted not to mount afight in defense of the policy.

Because there was so little support for the Cadillac taxremaining on Capitol Hill, many political observers saw thetwo-year suspension as all but killing the tax for good.

And yet, many employers are still operating under the assumptionthat the tax will be implemented in 2020, and are planningaccordingly.

A recent survey of employers by the Kaiser Family Foundationfound that 64% of large businesses said they had conducted ananalysis to determine whether their health plans were costly enoughto be subject to the tax. If the tax is implemented, the thresholdat which it is applicable will continuously adjust with the rate ofinflation.

The survey also found that 15% of employers reported shiftingmore health costs to employees in an attempt to stay below theCadillac tax threshold. Another 9% said they had switched to acheaper health plan.

Of course, attempts to reduce health care spending can never beattributed entirely to the Cadillac tax. Rising health costs are amajor problem that employers are trying to solve regardless of taxrates.

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