Op-Ed

To stabilize the Affordable Care Act, put the health insurance tax on hold

This photo taken Aug. 21, 2014 shows health care tax form 1095-A in Washington.
This photo taken Aug. 21, 2014 shows health care tax form 1095-A in Washington. AP

It’s possible you haven’t heard much about the Health Insurance Tax (HIT) that was passed as part of the Affordable Care Act, but you will unless Congress acts.

On behalf of our state’s leading business and trade groups, we are raising the alarm about this imminent threat, which is set to return in 2018 and which insurance companies will have to account for in a few weeks when they begin announcing premiums for 2018.

The Health Insurance Tax will significantly burden North Carolina businesses and employers, making it difficult to provide health insurance to our employees, expand our workforces and grow North Carolina’s economy.

In 2015, more than 400 Democratic and Republican members of Congress and the Senate acted in a bipartisan manner to delay the health insurance tax for 2017. Democratic Leader Nancy Pelosi noted that the HIT delay “suspends the Health Insurance Tax in the Affordable Care Act for one year – 2017, which will result in a reduction in health insurance premiums.”

That delay lowered policyholders’ premiums by 3 percent and saved the health care system $13.9 billion. However, without immediate action, the tax will kick in Jan. 1, 2018, costing Americans, employers, states and the federal government $22 billion in 2018 and $267 billion from 2018 to 2027.

Actuarial consulting firm Oliver Wyman estimates that if left in place, over the next decade, the HIT will increase the cost of premiums by $2,326 for individuals and $6,675 for family coverage for large employers and by $2,282 for individuals and $6,190 for family coverage for small businesses.

Insurance commissioners, actuaries and independent researchers all agree that delaying the health insurance tax will help lower premiums by at least 3 percent, and a delay of the HIT should be part of any stabilization package considered by Congress.

If Congress doesn’t act to delay the HIT, states with Medicaid managed-care programs will face $5.5 billion in higher costs because of the tax on health insurance – putting pressure on state budgets and other priorities.

Additionally, thousands of retired state employees who have Medicare Advantage will face premiums that are 30 percent higher because of the tax on health insurance. In a letter to Congress, the Better Medicare Alliance noted that “[t]he fact is, more than 20 percent of the HIT will be paid by Medicare Advantage beneficiaries, most of whom live on fixed annual incomes and more than one-third (37 percent) of whom live on less than $20,000 per year. Its impact will be felt by Americans all over the country, especially by senior and disabled beneficiaries in Medicare Advantage. ... [B]eneficiaries may face reduced or eliminated services that are of high value to them, such as reduced cost sharing, care in the home and supplemental benefits.”

This is unacceptable.

Our member companies want to be good partners in providing access to health care and creating new jobs, but this tax would greatly hinder our ability to do both and could even force our members to cut jobs. We are asking Congress to make delaying the HIT a major and urgent priority.

Dave Simpson is president & CEO of Carolinas AGC. Lew Ebert is president and CEO of the North Carolina Chamber. This op-ed was also signed by Larry Wooten, president of the North Carolina Farm Bureau; Gary Harris, executive director of the N.C. Petroleum Marketers Association; Tim Kent, executive director of the N.C. Beer & Wine Wholesalers Association; Lynn Minges, president & CEO of the N.C. Restaurant and Lodging Association and Andy Ellen, president of the N.C. Retail Merchants.

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