Health insurers and small businesses are pushing their long-sought goal of abolishing Obamacare's health insurance tax as lawmakers work to repeal and replace the healthcare law.
The tax is a priority for insurers even as negotiations have centered on the Obamacare repeal bill and federal insurance payments.
At the start of the year, Marilyn Tavenner, president and CEO of America's Health Insurance Plans, wrote a blog post calling for the repeal of the tax, and insurance company leaders have raised it in recent earnings calls, even attributing a delay in the tax this year as contributing to better-than-expected growth.
Stephen Hemsley, CEO of UnitedHealthcare, began the company's first-quarter earnings call last week by saying that affordability for customers could be most improved by repealing the tax, which he said would be shifted onto consumers in the form of higher premiums.
"We hope Congress acts soon to repeal the health insurance tax," he said. "We have no insight about whether that will or will not occur."
Anthem CEO Joe Swedish also raised the issue of the health insurance tax Wednesday during the company's first-quarter earnings call, saying it would raise rates by between 3 and 5 percent.
The tax was projected to contribute $142 billion in revenue for the federal government over the course of a decade, and started in 2014. It netted $8 billion in 2014, increased by 41 percent in 2015, to $11.3 billion, and after 2019 it will increase each year according to premium growth. Insurers estimate that if implemented next year, the tax would raise premiums for customers by roughly 3 percent.
Nonpartisan groups have scored the effect of the tax. A 2009 Congressional Budget Office analysis projected that costs would shift onto consumers in the form of higher premiums, and a projection from the Joint Committee on Taxation estimated that families could save $400 a year without it.
Opponents point out that it affects a wide range of customers outside those on the Obamacare exchanges, including those on Medicare or Medicaid and employers that don't have a self-funded plan.
"Ending CSR payments will drive up premiums by about 19 percent," said Kristine Grow, spokeswoman for America's Health Insurance Funds, said in an email, referring to the federal insurance funds that lower out-of-pocket medical costs for consumers, whose future is uncertain under the Trump administration. "Implementing the health insurance tax will drive up premiums another 3 percent. Unless Congress takes action, consumers can expect at least a 22 percent increase in premiums – and that's before medical cost trend or other factors are figured in."
Aetna, which is not a member of AHIP, also opposes the tax. "The Health Insurer Tax would result in increased premiums and a potential loss of highly valued benefits for many of our members, particularly seniors with fixed incomes," T.J. Crawford, spokesman for Aetna, said in an email. "If Congress does not act to repeal the tax, we support an immediate delay or steps to mitigate its impact in 2018."
No Democrats support the bill Republicans are advancing to repeal portions of Obamacare, called the American Health Care Act, but a few have supported repealing the tax on insurers.
The Jobs and Premium Protection Act, a bipartisan House bill introduced in March, has the support of 141 Republicans and seven Democrats.
Rep. Kyrsten Sinema, an Arizona Democrat who introduced the legislation with Republican Rep. Kristi Noem of South Dakota, called it a "bipartisan, common-sense fix," and an example of a measure that would "increase access to quality, affordable healthcare."
The parties have agreed to delay the tax in the past. In 2015, Congress and the Obama administration suspended the health insurance tax for 2017 as part of a spending bill, but it's set to go into effect next year. The spending plan also delayed the medical device tax and the "Cadillac tax" on high-cost employer plans for two years.
Those changes represented ones that Democrats were willing to make to the law, and Republicans framed the delays as examples of small victories they logged in gutting the law. From the perspective of Democrats, suspending the tax offered a small relief to insurance companies that lost out on federal risk corridors payments, which Republicans stymied, causing heavy losses for insurers. Losing that funding contributed to premium steep increases in 2017.
It's not clear whether repealing or delaying the health insurance tax might become an area of bipartisan compromise again. By suspending the health insurance tax, the federal government lost $13.9 billion in revenue, which, along with other taxes in Obamacare, were meant to offset the costs associated with expanding coverage.
The American Health Care Act repeals all taxes in Obamacare, including the health insurance tax, and Democrats have largely characterized the bill as a handout to the wealthiest Americans.
But several groups hope that delaying or repealing the tax will gain momentum. A coalition called Stop The HIT has been waging an advocacy campaign to have the tax repealed and supports the portion of the American Health Care Act that does so. The group includes a wide-ranging number of associations, including the National Association of Convenience Stores, the National Retail Federation and the National Small Business Association.
"America's small businesses bear the overwhelming burden of the health insurance tax," a representative for the group said in an email. "The suspension of the HIT for 2017 provided significant relief for owners and their employees, and it's critical that the suspension be extended moving forward. Time is of the essence as many employers are renewing coverage for the next year and will see the added cost of the HIT in the form of higher premiums."