House lawmakers look to delay health insurance tax until 2021

A bipartisan group of House lawmakers on Thursday moved to delay the health insurance tax for another year, triggering the next round of work to curb the Affordable Care Act’s taxes on the industry.

Although the lawmakers aren’t proposing an all-out repeal, the measure would be the third delay of the assessment. Reps. Kristi Noem (R-S.D.) and Jackie Walorski (R-Ind.) co-sponsored the bill, along with Reps. Kyrsten Sinema (D-Ariz.) and Ami Bera (D-Calif.).

Insurers have to pay the tax for 2018 though it was suspended in 2017, and Congress passed another moratorium for 2019. Insurers estimate it will cost them $14.3 billion this year. The tax went into effect with the ACA and cost the industry just over $11 billion in 2015 and 2016 until the delay last year.

Oliver Wyman Actuarial Consulting projected that the tax likely would raise premiums by 2.7% to 2.8% each year it is in place as insurers build it into plans. That could spell $165 hikes for enrollees in the individual market, a more than $520 increase for a family in the smallgroup market and a more than $560 increase per family contract in the large-group market.

The insurance trade association America’s Health Insurance Plans applauded the move, which it says will lower rates across the market for 2020. “Americans have been calling for more affordable coverage and care, and this bill delivers for them,” AHIP said.

Along with the 2019 delay of the health insurance tax, Congress also delayed for two years the Cadillac tax and the 2.3% excise tax on the sale of medical devices.

Although carriers say lifting the taxes will relieve enrollees, the Congressional Budget Office says the delays will add to the deficit. Last year, the CBO said repealing those taxes would reduce federal revenue by $144.7 billion over 10 years. Delaying the Cadillac tax until 2026 would cost $66 billion.