Insurers struggle to win reprieve of Obamacare tax

Health insurers won a victory in 2015 when a tax that was part of the Affordable Care Act was suspended. Now as they fight to repeal or delay the tax again before it comes back into effect, the odds don’t seem to be in their favor.

Insurers, businesses and conservative groups are scrambling for ways to at least delay the health-insurance tax, or HIT, following the collapse of health-care legislation in July. They seemed poised for victory just a few months ago, when the health-insurance fee, and most of the other levies enacted to help fund Obamacare, were targeted in repeal bills passed by House Republicans and considered by Senate Republicans.

The health-insurance tax, which is scheduled to go back into effect in December, is an annual fee owed by insurers such as Anthem Inc., UnitedHealth Group Inc. and Aetna Inc. that varies based on their share of net premiums written nationally — the aggregate amount owed would total $14.3 billion in 2018. Those opposed to the tax are trying to pitch the message that repealing it could prevent higher premium costs for consumers.

The HIT took effect in 2014, but an omnibus bill passed at the end of 2015 temporarily suspended it starting last year.

With a full Obamacare repeal stalled, one option for HIT opponents is to push for including its repeal or delay in broader legislation to overhaul the U.S. tax code, according to three people familiar with the effort.

An alternative would be to add the provision to a continuing resolution to fund the government, said the people, who asked not to be named because they weren’t authorized to speak publicly. Both options face considerable opposition.

“There’s broad agreement in Washington that we need urgent, bipartisan solutions to improve health-care affordability,” said Elena Tompkins, executive director of Stop the HIT, a coalition of industry groups and small business associations that wants to repeal the tax. “It’s why we need Congress to act now and provide immediate relief from the health-insurance tax.”

Tompkins said Congress needs to take action as soon as possible since insurance companies lock in premiums for the individual insurance exchanges in September. She said the group is considering all legislative options.

Three dozen conservative groups and activists including Americans for Tax Reform urged House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell to repeal or delay the HIT and Obamacare’s medical-device tax, to avoid “higher premiums and higher costs for middle class families, seniors, and small businesses,” the groups said in a letter dated Aug. 10.

The health-insurance tax will increase premiums by $5,000 per family over the next decade, the letter said, citing research from the American Action Forum.

Ryan has signaled openness to eliminating another Obamacare levy — a 3.8 percent net investment income tax on top earners — as part of a tax overhaul but he’s been firm so far on the health-insurance tax.

The difference is that the investment tax affects “capital income” and might slow the economic growth that he and other Republicans have pledged to deliver, Ryan said. “Other taxes that affect health care, like the HIT tax and those taxes, those we see as part of Obamacare,” he said.