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Republican Senators Seek To Lower Taxes For Health Insurers, Despite Industry’s Record Profits

By Igor Volsky  

"Republican Senators Seek To Lower Taxes For Health Insurers, Despite Industry’s Record Profits"

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In October, the health insurance industry released a report alleging that the Affordable Care Act’s taxes on health insurance plans will force companies to shift costs to consumers, adding up to “at least $73 billion in fees through 2019 and increase premiums between 2.8 and 3.7 percent in 2023.” Weeks later, Republican Sens. John Barrasso (WY) and Orrin Hatch (UT) publish an op-ed in Politico echoing this very same warning:

This is how it works: Starting in 2014, health insurance companies will be whacked with a tax based on their net premiums written in the fully insured market. Eighty-seven percent of small businesses purchase insurance in this fully insured market. It is also the place that the self-employed and uninsured go to purchase insurance.

So who will pay this tax? Ultimately, small businesses and their employees. It will most likely get passed through to employees — who will pay for it in lower wages or higher premium contributions. The average employee with a family plan will see take-home pay reduced by $5,000 over the next decade because of this tax, according to one study.

Set aside the hypocrisy of Republicans complaining about policies that pay for spending legislation — remember how they demanded that health care reform be fully paid for? — and what you have are two senators who are gulping down the industry’s kool-aid on premium increases. Both men count the insurers among their top campaign contributors, so it’s certainly no accident that they’re asking Congress to repeal taxes on an industry that’s earning record profits and is about to benefit from tens of millions of new customers as a result of the Affordable Care Act (ACA).

Of course, the appropriate response isn’t to roll back the taxes — which are necessary to finance reform and ensure that coverage expansion is fully paid for — but to strengthen provisions that help lower costs and mitigate the cost-shift. The ACA already requires insurers to spend 80 to 85 percent of their premium dollars on health care rather than administrative expenses and forces companies to justify proposed premium increases. And if the industry is now arguing that it doesn’t have the tools to control premium increases, then perhaps Barrasso and Hatch should bring back some of the cost control measures they helped defeat during the health reform debate. I’m looking at you, public option.

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