In Congress, path to repeal or delay Affordable Care Act health insurance tax appears murky

Leaders in the House have said they don’t want tax reform legislation to address healthcare taxes.

With the health insurance tax poised to return in 2018 after a one-year hiatus, the industry is once again lobbying to delay it or repeal it. But it’s unclear if those efforts will succeed.

The tax, which was in place from 2014 to 2016, was written into the Affordable Care Act to help offset the cost of tax credits for individual exchange enrollees. Following an industry lobbying blitz, an appropriations bill passed in late 2015 that included a one-year moratorium on the tax for 2017—a provision that had bipartisan support. 

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Two recent reports commissioned by UnitedHealth estimate that the return of the tax in 2018 will increase health insurance premiums by as much as $22 billion—or 2.6%—and cost the Medicaid program $5.5 billion. Conservative groups have also petitioned Congress to repeal both the health insurance tax and medical device tax.

However, while it seems as though at least extending the moratorium would be relatively uncontroversial, that task is far easier said than done. 

For one, Congress has a slew of pressing issues to attend to in September, such as raising the debt ceiling and ensuring the government is funded. 

And while tax reform—another of the GOP’s main priorities—might seem like an obvious vehicle, leaders in the House have said they don’t want any such legislation to address healthcare taxes, according to Axios. Addressing the ACA’s taxes also isn’t currently on the table in the Senate’s bipartisan talks about how to stabilize the individual exchanges.

There is some hope, however, that a health insurance tax relief provision could make its way into either a stabilization package that Rep. Mark Meadows, R-N.C., and Tom MacArthur, R-N.J., are formulating, or a long-shot ACA repeal-and-replace bill championed by Sen. Bill Cassidy, R-La., and Sen. Lindsey Graham, R-S.C. In addition, the article notes that the tax could be addressed in a bill to reauthorize the Children's Health Insurance Program in the event that gets pushed back to December.

If Congress is able to at least delay the tax again, that could help mitigate insurers’ mounting concerns about operating on the ACA exchanges next year. As a recent report from consulting firm Oliver Wyman states, continuing the moratorium would “help reduce the significant premium increases and provide more stability to the individual ACA market.”