AHIP Says Tax Would Raise Costs of Coverage

The new health insurance tax included in the Affordable Care Act (ACA) will increase the cost of health care coverage for consumers and employers in every state, according to a new state-by-state analysis conducted by Oliver Wyman for America’s Health Insurance Plans (AHIP).

The ACA imposes a new sales tax on health insurance that starts at $8 billion in 2014, increases to $14.3 billion in 2018, and will continue to increase each year. The Joint Committee on Taxation estimates that the health insurance tax will exceed $100 billion over the next ten years.  “With full implementation of the ACA a year away, the focus needs to be on making coverage more affordable, Taxing health insurance will have the opposite effect by making it more expensive.” said AHIP President and CEO Karen Ignagni. Ignagni noted that the health insurance tax will increase costs for individuals and families purchasing coverage on their own, small businesses, Medicare Advantage beneficiaries, and Medicaid managed care programs.  AHIP supports legislation (H.R. 1370, S.1880) that would repeal the tax.

The new Oliver Wyman analysis builds upon its 2011 report, “Estimated Premium Impacts of Annual Fees Assessed on Health Insurance Plans,” which provides national estimates on the impact of this tax on health insurance premiums.  The previous report found that the health insurance tax alone “will increase premiums in the insured market on average by 1.9% to 2.3% in 2014,” and by 2023 “will increase premiums 2.8% to 3.7%.”

The latest report, “Annual Tax on Insurers Allocated by State,” provides per-person and cumulative estimates of the impact this tax will have on individual market consumers, employers, and Medicare Advantage beneficiaries in all 50 states, as well as the impact on state Medicaid managed care programs.  The charts below list the top five states with the highest per-person cost impact in each market segment.  Families purchasing coverage in the individual market will be hit the hardest in New York while those getting coverage from a small employer will be most impacted in West Virginia.  Medicare Advantage beneficiaries in New Jersey and the Medicaid managed care program in Washington, DC top those lists.

According to the Joint Committee on Taxation: “For those insurance premiums that are subject to the fee, we estimate that the premiums, including the tax liability, would be between 2.0 and 2.5 percent greater than they otherwise would be.”

In a November 30, 2009 letter, the Congressional Budget Office stated, “New fees would be imposed on providers of health insurance and on manufacturers and importers of medical devices.  Both of those fees would be largely passed through to consumers in the form of higher premiums for private coverage.” For more information, visit www.AHIP.org/Affordability.

Last Updated 05/25/2022

Arch Apple Financial Services | Individual & Family Health Plans, Affordable Care California, Group Medical Insurance, California Health Insurance Exchange Marketplace, Medicare Supplements, HMO & PPO Health Care Plans, Long Term Care & Disability Insurance, Life Insurance, Dental Insurance, Vision Insurance, Employee Benefits, Affordable Care Act Assistance, Health Benefits Exchange, Buy Health Insurance, Health Care Reform Plans, Insurance Agency, Westminster, Costa Mesa, Huntington Beach, Fountain Valley, Irvine, Santa Ana, Tustin, Aliso Viejo, Laguna Hills, Laguna Beach, Laguna Woods, Long Beach, Orange, Tustin Foothills, Seal Beach, Anaheim, Newport Beach, Yorba Linda, Placentia, Brea, La Habra, Orange County CA

12312 Pentagon Street - Garden Grove, CA 92841-3327 - Tel: 714.638.0853 - 800.731.2590
Copyright @ 2015 - Website Design and Search Engine Optimization by Blitz Mogul