Analysis: Keeping ObamaCare taxes in place will hit American wallets hard starting in 2018
The DC GOPe has seriously dropped the ball on repealing ObamaCare — THE ISSUE that gave them their current majorities. There have actually been reports that congressional Republicans want to keep the ObamaCare taxes in place.
Well, an independent actuarial analysis indicates that retirees, working people, businesses, and local governments are facing a significant financial hit in 2018 if those taxes aren’t killed off:
[…] Section 9010 of the Patient Protection and Affordable Care Act (Pub L. 111-148) and the Health Care and Education Reconciliation Act (Pub L. 111-152), collectively “the ACA,” imposes fees on insurance companies that offer fully-insured health insurance coverage. The fees, which are treated as taxes under the Internal Revenue Code, are assessed on earned health insurance premiums, with certain exclusions.
In December 2015, Congress passed H.R. 2029, the Consolidated Appropriations Act, which created a one-year moratorium on collecting the insurer taxes for 2017. The $13.9 billion that would have been due in 2017 will not be collected and, as a result of the moratorium policyholders are projected to save approximately 3% of premiums. However, under current law the moratorium will lapse in 2018 and the tax on health insurance will be reinstated for 2018 at a higher annual level ($14.3 billion), resulting in higher fully insured premiums for the 2018 plan year and all future years.
The taxes on health insurance are non-deductible for federal tax purposes for health insurers. Therefore, for each dollar assessed and paid in taxes, more than a dollar in additional premium must be collected (e.g. $1.54 for every $1.00 in taxes, assuming a 35% federal corporate income tax rate)1 yielding a total premium impact in 2018 of as much as $22.0 billion. In total, the amount assessed and collected is projected to be $267 billion over the next ten years (2018 to 2027). This report provides an analysis of the impact of the tax on health insurer premiums beginning in 2018.
In addition, we provide the allocation of these taxes across each state and by line of business and also describe the potential effect that the taxes and increased premiums will have on enrollment. In summary, we estimate that the tax on health insurance will increase premiums by 2.6% in 2018, and between 2.5% and 2.7% in subsequent years when the amounts collected in taxes is mandated to increase at the same level as premium trend. In 2018, this amount equates to $158 per individual in the non-group market, $185 per single contract and $500 per family contract in the small group market, $188 per single contract and $540 per family contract in the large group market, $245 per Medicare Advantage member (including Special Needs Plans and Employer Group Waiver Plans), and $181 per Medicaid managed care enrollee.
Over the next ten years, this amount equates to $2,276 per individual in the non-group market, $2,282 per single contract and $6,190 per family contract in the small group market, $2,326 per single contract and $6,675 per family contract in the large group market, $3,030 per Medicare Advantage member, and $2,370 per Medicaid managed care enrollee. The taxes apply to all fully-insured coverage, including the on-exchange and off-exchange individual market, large and small group markets, and any insured public programs including Medicare Advantage, Medicare Part D, and Medicaid Managed Care. The increased cost of health insurance leads to many negative outcomes, including:
- Increasing costs facing the Medicare Advantage and Medicare Part D programs that could result in increased cost-sharing and premiums for Medicare Advantage and Medicare Part D enrollees.
- Increasing the tax burden on small employers that are fully-insured, unlike self-insured public and private employers that are not required to pay the tax on health insurance.
- Increasing costs for States and State taxpayers to pay the tax costs for Medicaid Managed Care enrollees.
- Increasing the cost of fully-insured health care coverage will result in individuals and groups delaying purchase of health insurance and increasing the number of uninsured individuals.
- A potential exacerbation of concerns related to “adverse selection” in the individual and small group markets as younger, healthier individuals forego coverage leading to a less stable risk pool and higher premiums. […]
Browse to pages 14 and 15 of the linked report. You will see the projection that North Carolina individuals and businesses will be hit with $365,777,000 in premium increases in 2018 alone if the ObamaCare taxes stay in place. Nationwide, premiums will soar by $14.3 BILLION.
California, New York, Texas, WISCONSIN and Florida take the biggest financial hit by far. North Carolina is set to take the 16th largest financial hit nationwide if the taxes stay put.
There will be no premium tax on the “regular” NC state health plan — which is self-funded. But folks-in-the-know in Raleigh suggest that Medicare Advantage could be impacted with $45 million in annual premium increases due to the ObamaCare taxes.