Super Profitable Health Insurance Industry To Lobby Against Health Law’s Tax

The Hill’s Sam Baker reports that the health insurance and small business lobbies are teaming up to advocate for the repeal of the Affordable Care Act’s tax on health policies. The provision, which is scheduled to go into effect in 2014, will raise $8 billion in its first year (and more thereafter) to pay for the coverage provisions in the law:

NFIB is already part of a large coalition dedicated to fighting the sales tax. AHIP — which has consistently opposed the tax — said it’s partnering with NFIB to highlight the effects not only on employers, but also people who buy individual coverage on the open market.

This tax will increase costs for small employers and also for individual market customers and public program beneficiaries. We appreciate NFIB’s leadership on this critically important issue, and look forward to working with them to shine the spotlight on how the new premium tax will drive up the cost of coverage,” AHIP spokesman Robert Zirkelbach said in a blog post.

Insurers have referred to this tax as “an unprecedented sales tax on small businesses and individuals,” and unless the industry offsets the fees through innovation and efficiency, some of the costs may be passed down to employers and individuals. But generally speaking, in a law that pays for its coverage expansions and reduces the deficit, somebody has to pay more if others get more. Taxing the industry — which is currently seeing incredible profits and will gain millions of new customers from reform — sounds like a much less burdensome option than lowering the premium subsidies and cost-sharing credits for the newly insured.