Could the health insurance tax be repealed?
Amid a possible bipartisan break in the clouds of Congress, insurance advocates see a window for changing or even repealing the much-loathed health insurance tax in the Affordable Care Act.
The House of Representatives passed a lengthy bill replacing the Medicare Sustainable Growth Rate policy and making other Medicare payment and plan changes, including higher income thresholds for means testing. The bill also reauthorized CHIP funding through 2017.
The Senate, meanwhile, has been at work crafting a budget resolution and will vote on the House bill after returning from a spring vacation.
Among the many amendments up for consideration is one to fully repeal the ACA's health insurance tax, co-sponsored by Republicans Orrin Hatch of Utah and Pat Roberts of Kansas.
The health insurance tax was pegged to raise $8 billion last year from a range of private and publicly-funded health plans, with exceptions for self-insured employers and some non-profits. For this year, employers, consumers and insurers will have to pay more than $11 billion, and then incrementally pay up to $14 billion by 2018.
All told, the tax will eventually raise more than $145 billion to help pay for the cost of expanding health coverage to some 40 million Americans who were uninsured prior to the ACA.
But America's Health Insurance Plans views the tax as a misguided redistribution that doesn't solve underlying problems with healthcare affordability, and has been leading a push to repeal it--getting support from lawmakers, including 150 House members, and sponsoring Stop The HIT, an online and advertising campaign explaining how much certain businesses or policyholders could pay based on their premiums.
"Imposing a tax on health insurance does nothing to make coverage more affordable or accessible," said AHIP president and CEO Karen Ignagni. "It only increases costs for families, seniors enrolled in Medicare Advantage, small businesses, and state Medicaid programs. Repealing the health insurance tax would be an important step to affordability for millions of Americans."
According to forecasts by the actuarial firm Oliver Wyman, repealing the insurance tax could save individuals around $500 per year in premiums, $688 for small groups, and $719 per year for family coverage.
Though studies from Oliver Wyman and others makes a case for changing the ACA insurance tax, a repeal is largely still in the realm of political theatre. Among other healthcare ideas sponsored by Republican Senators like Hatch and Roberts are a repeal of the medical device tax and a repeal of a prohibition on using health savings account funds to buy over-the-counter medication.
While an insurance tax repeal and other ACA changes could have a chance at passing the House and Senate, they're unlikely to be signed by President Obama--unless included in a grand bargain on Medicare, Social Security or comprehensive tax reform. That kind of compromise could end with the repeal of the federal government's largest tax expenditure, the $250 billion annual tax exemption for employer-sponsored health insurance.
