President Trump is poised to sign legislation preserving an Obamacare tax hike that could raise insurance premiums another 5 percent.
The "Health Insurance Tax" is mandated under the Affordable Care Act. It levies insurance companies with a 4 percent to 6 percent tax on every health plan sold in America, with the exception of coverage provided by firms that self-insure their employees.
Republican sources on Capitol Hill said Monday that there are no plans to delay implementation of the tax in a government funding bill that Trump must sign by Friday to avoid a partial government shutdown.
"It's not on the table for negotiation," a senior House Republican aide familiar with the budget talks said, requesting anonymity in order to speak candidly.
If that holds, industry sources said that insurance companies would move immediately to pass along the cost of the tax to consumers in health plans being priced for sale later this year for coverage in 2018.
Millions of Americans could see their premiums rise by 4 percent to 6 percent as a result. Among them are seniors who purchase Medicare Advantage plans — voters that have tended to vote Republican. That could cause the GOP a political problem in the 2018 midterms.
"Republicans have been so anti-Obamacare and pro-affordabiltiy, it would be ironic to allow the Health Insurance Tax to come back on line given its impact on affordability," said a Republican operative who advises the insurance industry.
Former President Barack Obama's healthcare law created several new taxes to finance expanded coverage and guarantees provided under the statute. The Health Insurance Tax is one of them, but its implementation had been delayed a few years, most recently as a part of a must-pass government funding bill, or Continuing Resolution, that was signed by Obama in 2015.
Additional Obamacare taxes have been delayed since the ACA was enacted in 2010. The medical device tax, hitting domestic medical device manufacturers, and the "Cadillac tax" on expensive health plans, were both delayed until 2018, for plans priced to sell the following year.
Trump and House Republicans continue to negotiate legislation that would partially repeal and replace Obamacare. Their proposal would repeal the ACA tax regime nearly in its entirety. It's unclear when the package might be ready for a vote, although the Trump administration is pushing House Republicans to hold one this week, in advance of the president reaching his first 100 days in office.
The Trump administration hasn't indicated a position on Obamacare's Health Insurance Tax as it relates to the government funding bill.
Rather, Trump is attempting to bargain with Senate Democrats, who have filibuster power, by offering money for a particular Obamacare subsidy known as "Cost Sharing Reductions" in exchange for their approving funds for constution of a security wall along the Southern border. The White House could not immediately be reached for comment on the Health Insurance Tax.
Grover Norquist, leader of the conservative group Americans for Tax Reform, urged Republicans in an op-ed in The Hill to use the government funding bill to delay implementation of the HIT.