Payers, business groups roll out massive lobbying effort to get delay for ACA insurer tax

Capitol building in Washington
Insurer and industry groups are making a last-ditch effort to convince lawmakers to insert another delay for the ACA's health insurance tax for 2020. (rarrarorro/iStock/Getty Images Plus/Getty Images)

Insurer and business groups are ramping up their efforts to delay a $16 billion tax mandated by the Affordable Care Act that is set to go back into effect next year. 

Insurer group Stop the HIT just launched a seven-figure advertising and grassroots campaign to include a delay in an end-of-year funding package. Business and advocacy groups such as the Better Medicare Alliance and the U.S. Chamber of Commerce are also organizing letters to lawmakers to spur action.

“We’ve seen a growing number of members join the various bipartisan legislation in the House and the Senate to suspend the tax,” said Clare Krusing, spokeswoman for Stop the HIT. “One of the most encouraging pushes of recent has been from freshman House members who have called on leadership to prioritize suspension as ‘must pass’ legislation.”

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A House bill to delay the tax for two years has 162 bipartisan co-sponsors, and a Senate version has 32 sponsors. The stakes are high for the insurance industry, as several major insurers such as Humana have listed the tax as a potential revenue headwind for 2020.

Insurers are expected to be hit with $16 billion in taxes in 2020 without another delay. A 2018 analysis from consulting firm Oliver Wyman estimated the tax will lead to a 2.2% increase in 2020 premiums.

The tax was delayed in 2019 and had a moratorium in 2017. 

A delay for 2020 will not be passed on its own and will likely be included in one of two packages: a government funding package or as part of a series of tax extenders. Congress passed a continuing resolution to fund the government until Dec. 20, averting a government shutdown.

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Lawmakers are expected to put together a longer funding package for most of 2020 by that date. It remains unclear whether an insurance tax delay would be included in an end-of-year funding package or as part of a package of extenders for several taxes.

However, negotiations on tax extenders have hit a standstill in the Senate, GOP leadership has said.

“There seems to be a less sense of urgency among Senate Democrats about getting a deal on extenders,” said Sen. John Thune, R-South Dakota, a member of Senate leadership. “I hope that changes. It will take both sides with incentive to get a package deal.”

Thune expected that any deal with be “fairly minimalist” and will have a “lot of traditional extenders as opposed to new policies.” Thune added that he hopes that a tax extender package could be passed alongside the end-of-the-year spending bill, but so far no final decision has been made.

The House and Senate are also in the middle of a battle over an impeachment inquiry into President Donald Trump. The House has held impeachment hearings over the past two weeks, and, if articles of impeachment pass the House, the Senate will hold a trial.

But industry groups weren’t worried about impeachment causing a distraction and ending any hopes for a delay of the tax for 2020.

“The fact is this often goes to the end of the year,” said Allyson Schwartz, president of the Better Medicare Alliance, of the delay. “This is not new.”