Health insurance tax return would increase out-of-pocket costs

• The Affordable Care Act’s health insurance tax on payers will increase insurance costs and premiums if it’s brought back in 2020, according to a new report by Oliver Wyman commissioned by UnitedHealth Group.
• Congress approved a one-year moratorium on the tax for 2019, but it is expected to return the following year. That would increase premiums by 2.2% each year and cost payers $16 billion for 2020 alone, Oliver Wyman said.
• That added cost will be transferred to members and employers through higher costs and premiums, resulting in people dropping their coverage and creating a less stable risk pool.

The HIT charges payers and employers for fully-insured coverage. That includes plans in the exchanges, individual insurance, large and small group markets and insured public programs like Medicare Advantage and Medicaid managed care. The ACA included the tax as a way to help pay for the newly insured in Medicaid and subsidized exchange plans.

However, payers have railed against the tax, which they say gets passed onto consumers, who then pay higher premiums and out-of-pocket costs.

Oliver Wyman predicted that 142 million people could get whacked by the HIT.

The return of the tax will lead to an increase of $196 per person in the non-group market, $154 per single contract and $479 per family contract in the small group market. In the large group market, it will mean a $158 per single contract increase and $458 hike per family contract. The HIT will also increase Medicare Advantage plans by $241, which includes special needs plans and employer group waiver plans, and $157 for Medicaid managed care enrollees.

Payers and employers oppose the tax’s return. The National Federation of Independent Business Research Foundation said that the tax will cost between 152,000 and 286,000 jobs by 2023.

With the HIT’s return expected in 2020, a bipartisan effort on Capitol Hill is hoping to delay the tax for another two years. The Health Insurance Premium Reduction Act is currently in the House Subcommittee on Health. America’s Health Insurance Plans supports the bill.

However, suspending the HIT again means less money to help fund poor and lower-middle-class people’s insurance. For instance, Congress lost nearly $14 billion by suspending the tax in 2017. When Congress implemented the tax in 2014, the Congressional Budget Office estimated it would raise $142 billion over a decade.

If Congress decides to delay the HIT again, it will have to find money elsewhere or make cuts to other programs to help people with subsidized plans.

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