Authored By: Robyn Boerstling, Vice President of Infrastructure, Innovation and Human Resources Policy at the National Association of Manufacturers
For middle-class families across the country, rising health care costs present a difficult challenge. While the reasons for those costs are many, one factor is the plethora of taxes in Obamacare (also known as the Affordable Care Act, or ACA). Today, I am offering some thoughts on the needless health insurance tax (or HIT) that adds costs for roughly 140 million Americans because of how they receive insurance—usually employees and dependents at small businesses, people who buy individual plans and Medicare beneficiaries to name a few. Manufacturers are no exception.
Going into 2019, a welcome, one-year suspension of the HIT will provide some measure of relief from this onerous tax’s effects on individuals and families. However, Congress needs to go further and suspend this burdensome tax into 2020 and beyond. The good news is the House already passed legislation in July that would do just that; now it’s time for the Senate to do its part to delay the tax beyond 2019.
Here are five reasons why the HIT matters:
1) The HIT increases premiums, and a delay will lower costs for individuals and families directly, representing close to $500 of savings for a family of four and between $200 and $300 for individuals.
2) Benefits planning for future years starts now. What is decided in 2018 and 2019 will shape premium costs in 2020 because insurance professionals who design plans have to factor a presumed obligation to pay the HIT and cannot assume Congress will do away with the tax despite its unpopularity. Acting now to suspend the tax further into the future helps rein in additional costs and provides planning certainty, especially for companies that sponsor health coverage for employees. For example, temporary relief from the HIT in 2019 will drive down the average Medicare Advantage premium cost for the year.
3) Voters across the board don’t like or want the government to collect taxes off their health care—period. Seven in 10 Americans say they oppose the HIT, and 57 percent of Americans want the tax to go away altogether. The HIT is just a sales tax on health coverage and only adds costs, transferring billions from working people and retirees to the government. It is a textbook example of an unfair tax.
4) Health care beneficiaries are consumers too, yet the tax is punitive and does not improve health care affordability or reward consumers for making good health care choices. It is unusually structured for a tax—allowing the tax to rise along with premiums—making it onerous for consumers on both sides of the equation.
5) HIT relief is bipartisan. Past votes in Congress to delay or repeal the HIT have garnered as many as 350 Democrat and Republican Members alike at a time when cross-party voting is unfortunately much less common these days. Sensible Republicans and Democrats agree that a HIT delay is good policy, which is why it’s welcome to see lawmakers come together to scrap this bad tax.
When Congress returns to Washington, D.C., in November, they must help manufacturers by advancing bipartisan, health care reforms.