The ERISA Industry Committee and the U.S. Chamber of Commerce are urging for the repeal of two widely disliked provisions of the Affordable Care Act: the Cadillac tax and the Health Insurance Tax.
Calls are getting louder for repeal of the taxes through upcoming tax reform in wake of the GOP giving up on ACA repeal. The latest repeal proposal, the Graham-Cassidy bill, was officially abandoned Tuesday due to a lack of votes.
The often-delayed 40% excess tax, which would affect health plans valued at more than $10,200 for individual coverage and $27,500 for families, and the Health Insurance Tax, a 2.6% tax on more than 100 million Americans that would yield $22 billion in 2018, according to a new study from Oliver Wyman (commissioned by UnitedHealth Group), is unpopular among unions, Democrats and Republicans. But those taxes still likely face a long road to repeal, experts say.
“The irony of a law that required employers to provide minimum value of affordable coverage is then going to tax those employers for doing just that,” says Katie Mahoney, executive director of health policy at the U.S. Chamber of Commerce. “I would like to see [the Cadillac tax] further suspended, and I’m hopeful that at the end of the year in an end-of-the-year package that’s something included.”
She notes that an outright repeal is unlikely to happen in the future, mostly because of the huge dollar amount associated with the cost.
“There is a broad recognition that it is a harmful provision,” she says.
Another aspect of the premium tax is that it's already baked into the Jan. 1 fully insured renewals, says Zack Pace, senior vice president of benefits consulting at CBIZ, Inc. and EBN columnist.
"Thus, if Congress waits until the last minute to renew the suspension for 2018, all that will do is create a 4% extra profit for the insurers," he says. "It will be too late to renegotiate the January renewals, update employee contributions and redo open enrollments."
ERIC agrees with that sentiment.
The large employers’ advocacy trade group recently supported Senate Finance Committee Chairman Orrin Hatch’s (R-Utah) call for elimination of these healthcare taxes.
HIT “will eventually consume all healthcare plans, putting women, seniors, low income families, the disabled, and traditional employers with diverse workforces at a dangerous disadvantage, ERIC says. “Recent surveys found that in 2020, 53% of large employers will have at least one plan hit by the Cadillac tax, and the percentage rises to a devastating 93% in 2026.”
The Oliver Wyman study found that the 2.6% premium increase in 2018 translates to an increase of $158 per person in the individual market; $185 per individual and $500 per family in the small employer market; $188 per individual and $540 per family in the large employer market; $245 per Medicare Advantage enrollee; and $181 per Medicaid managed care enrollee.
“What’s been interesting to me has been to hear from a lot of our large employers who I think of as self-insured employers. They have different employees that are in a fully insured plan in the large group market,” Mahoney says. “Even those employers that you would think are not going to be affected by the health insurance tax are finding that they have components of their business that are.”
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