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AHIP: Repeal Health Insurance Tax Now to Lower Premiums

By Gregory A. Freeman  
   February 22, 2017

Repealing the health insurance tax would lower health plan premiums about 3%, says the healthcare insurance industry's top advocacy group.

While Congress and President Trump plan their moves to dismantle the Affordable Care Act, the insurance industry group headed by a former administrator the Centers for Medicare & Medicaid Services says the most immediate effect on reducing premiums would come from repealing the health insurance tax (HIT).

Marilyn Tavenner, now president and CEO of America's Health Insurance Plans, which represents its member plans before federal policymakers and lawmakers, called for repealing HIT in a recent blog post. She called the tax "a direct sales tax on health insurance, which directly increases the premiums that people pay."

Tavenner noted that Congress provided a moratorium for the 2017 plan year. In 2018, however, the tax will require employers to pay an average $280 per employee more each year, and $220 more for individuals buying their own insurance coverage.

The health insurance tax will affect premiums at a rate of about 3%, says Kristine Grow, AHIP senior vice president for communications. "Those costs go up for consumers at a time when we're looking for those costs to come down," she says. "It's simply not helpful."

Employers and individual consumers have indicated to AHIP that repealing HIT would have a significant impact, Grow says. For employers, she notes, an additional $280 per employee is a major cost, whether you have 50 employees or 50,000.

A 2014 analysis concluded that over a 10-year period, HIT will result in the loss of 152,000 to 286,000 private sector jobs, and 57% will come from small businesses.

A bill calling for the repeal of HIT is currently supported strongly by both Republicans and Democrats. H.R. 246, the Jobs and Premium Protection Act, which would immediately repeal the HIT, has more than 140 bipartisan cosponsors.

Gregory A. Freeman is a contributing writer for HealthLeaders.

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