After logging a victory in Congress to suspend a controversial Obamacare tax beginning in 2019, health insurers and small businesses are now setting their sights on 2020.
Both groups praised the introduction of the bipartisan Health Insurance Premium Reduction Act in the House on Thursday, which would lift Obamacare’s tax on health insurance in 2020. The bill was introduced by Reps. Kristi Noem, R-S.D., Jackie Walorski, R-Ind., Kyrsten Sinema, D-Ariz., and Ami Bera, D-Calif.
Insurers estimate that suspending the tax would reduce premiums by about 3 percent for consumers. A 2009 Congressional Budget Office analysis projected that the tax shifts costs to consumers in the form of higher premiums. Because of this, health insurers often refer to the provision as the “premium tax.”
“Suspending the Health Insurance Tax will help to lower premiums for everyone, whether they get coverage through their jobs, buy their own coverage, or enroll in Medicare Advantage or Medicaid,” said Kristine Grow, spokeswoman for America’s Health Insurance Plans, the lobbying group representing insurers.
A business coalition that opposes the tax, called Stop the HIT, also praised the introduction of the legislation and cited an Oliver Wyman study projecting that the tax could save families $570 in premiums expenses each year.
“As we look ahead, small business owners and their employees need stability and predictability when it comes to their health care costs,” Elena Tompkins, executive director of Stop The HIT, said in a statement. “Providing relief from the HIT in 2020 would ensure millions of Americans continue to receive much-needed cost-savings for their health care dollars.”
Both groups want to see Congress repeal the tax altogether.
Congress has agreed to delay the tax other than in 2019. Congress and the Obama administration suspended the health insurance tax for 2017 as part of a spending bill, but it went back into effect in 2018.
By suspending the health insurance tax, the federal government lost $13.9 billion in revenue in 2017, which, along with other taxes in Obamacare, were meant to offset the costs associated with expanding coverage.
The tax was projected to contribute $142 billion in revenue for the federal government over the course of a decade and started in 2014.
