Suspending ACA taxes will cost more than $31B

stethoscope, coins and calculator
A delay of the health insurance tax is one of two recent congressional actions that have an upside for the health insurance industry. (Getty/mckare)

While industry leaders have applauded Congress’ decision to delay certain Affordable Care Act taxes, the move will cost the government $31.3 billion over 10 years.

That’s according to the Joint Committee on Taxation (JCT), which estimated (PDF) the effects of the revenue provisions in the stopgap spending measure that Congress passed Monday to end a brief government shutdown.

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The measure suspends the health insurance tax for 2019 and delays the Cadillac tax on high-cost employer-sponsored insurance plans until 2022. It also delays the medical device tax until 2020.

Per the JCT report, the Cadillac tax delay will decrease federal revenue the most—$14.8 billion over 10 years. Suspending the health insurance tax will lower revenue by $12.7 billion, and revenue will dip by $3.8 billion due to the medical device tax delay.

Still, America’s Health Insurance Plans—the industry’s major trade group—applauded the delay of both the health insurance tax and the Cadillac tax.

“These are the kind of solutions that will improve the affordability, availability and value of health insurance coverage for millions of Americans,” an AHIP spokeswoman said in an emailed statement.

RELATED: Return of health insurance tax will hike premiums by 2.6% next year, report estimates

A delay of the health insurance tax is not the only congressional action that has an upside for the health insurance industry. Companies will also benefit from the lower corporate tax rate set by the GOP tax policy overhaul.

UnitedHealth, the first insurer to issue its 2018 outlook, estimates the new policy will improve its earnings and cash flows by $1.7 billion this year. And while Humana hasn’t yet said how much it will benefit, the company has confirmed it will accelerate pay incentives and increase its minimum hourly wage for employees due to the lower corporate income tax rate.

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