The Affordable Care Act (ACA) authorized a health insurance tax starting in 2014 that is projected to total $142 billion over 10 years, according to the Joint Committee on Taxation. Unfortunately, the assessment ultimately will be a de facto tax on seniors and disabled people, small business owners, and self-employed individuals; as much of the tax will impact coverage costs for individuals with Medicare Advantage plans, managed Medicaid health plans, or fully insured commercial plans, per Congressional Budget Office findings. Congress must repeal the health insurance tax to prevent the potential for greater health access problems, job losses and increases in health costs beyond current trends.
The projected impacts of the ACA tax on public and private health plan enrollees are significant. Medicare Advantage enrollees will see their average out-of-pocket costs increase by more than $3,500 over 10 years, and those in privately run Medicaid plans will see a more than $1,500 cost spike over the decade, global consulting firm Oliver Wyman estimated. For private-sector health plans, the tax only affects people in the fully insured marketplace, meaning the burden is passed onto self-employed people and the 90% of small businesses that cannot self-insure. It has been estimated that private sector employment will fall by as many as 249,000 jobs in 2022 as a result of the tax, with most of the job losses in small business, according to the National Federation of Independent Business.
People who are in Medicare or Medicaid private plans, who own small businesses or who work for themselves already are vulnerable to rising health costs and struggling in the current economic climate. Adding such an additional financial burden to these populations will have a significant effect. Seniors will see their access to affordable care impacted, and company owners will need to decide what employment changes they must make to respond to the cost increases.
In these ways, the health insurance tax is contrary to the ACA’s goal of increasing health insurance access and making coverage more affordable to individuals and families. Congress already recognized this by approving a one-year moratorium on the tax for 2017. Now Congress must reduce the cost of health coverage and preserve access by approving bipartisan legislation that permanently repeals the health insurance tax.
January 1, 2017