Insurers argue that the health insurance tax that would require them to pay more than $260 billion to the government over 10 years, compelling them to raise premiums. (Photo: Shutterstock)
House Democrats and Republicans have teamed up on a bill that would postpone the health insurance tax from taking effect until after 2021. Joining them are representatives Ami Bera, D-CA, Josh Gottheimer, D-NJ, Jackie Walorski, R-IN and Kenny Marchant, R-TX, who have cosponsored a bill similar to a bipartisan effort in the Senate to do the same thing—put off the $16 billion tax on health insurance companies.
Healthpayer Intelligence cites a 2018 analysis by Oliver Wyman that was commissioned by UnitedHealth Group that finds that “[t]he taxes on health insurance are nondeductible for federal tax purposes for health insurers.” According to the analysis, for each dollar paid in taxes, requires more than an additional dollar in premiums be collected (for example, $1.54 for every $1.00 in taxes, assuming a 35 percent federal corporate income tax rate). The resulting impact on premiums would be as much as $22 billion.
That's likely to cause some serious problems for consumers. Lawmakers, according to Helathpayer Intelligence, have already been arguing since 2015 that the tax would raise premiums as well as destabilize the marketplace.
According to Walorski, “When it comes to health care, Americans are facing rising costs and fewer options. Raising taxes on health coverage would only make matters worse for families, small businesses, and Medicare Advantage enrollees. As we continue working to lower premiums for families and seniors, we need to pass this bipartisan bill to provide relief from the burdensome Health Insurance Tax.”
Insurers, for their part, have also been battling the tax, arguing that the provision that would require them to pay more than $260 billion to the government over 10 years would also compel them to raise premiums.
The Senate bill is based on the same sentiments. “Patients deserve access to affordable, quality health care—full stop,” Jeanne Shaheen, D-NH, said. ”Making health care coverage more affordable requires an all hands on deck approach, and suspending the health insurance tax is one component of that effort.”
The House bill has been referred to the Committee on Ways and Means and the Committee on Energy and Commerce for evaluation, while the Senate bill has been referred to the Committee on Finance.
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
