Two weeks into the New Year, the holiday season is already in the rearview mirror for most Americans. Gifts have long since been exchanged, celebratory toasts have been made and decorations have been put away. Yet, like that hideous-looking sweater, or the fruitcake that’s best suited as a doorstop, there are still some presents many of us wish we could return. Topping that list has to be an ill-conceived tax originally contained in the 2010 Affordable Care Act but which only took effect on the first day of 2018: the Health Insurance Tax (HIT). Congress has an urgent opportunity this week to reverse this dangerous course.
Levied on the premiums that provide health insurance to more than 150 million Americans, the HIT is a one-two punch to families, small businesses, and seniors. While the tax itself will fatten the federal Treasury by an additional $14 billion this year, because the HIT is not deductible from federal corporate income tax to the insurers that must collect it, they must factor an additional amount into their overhead. The bottom line: premiums are projected to rise by some $20 billion total this year because of the HIT.
The pain will be felt throughout the insured community, but is especially acute for seniors and small businesses. Medicare Advantage members will be walloped by an average increase of $255 per enrollee this year alone. It is unconscionable that Congress would impose such a burden on seniors in order to pay for a failing Obamacare structure that has already limited their healthcare choices and raised their rates.
The National Federation of Independent Business calculated that the downstream impacts of less affordable premiums from the HIT include as many as 286,000 lost jobs over 10 years, more than half of which would occur at smaller firms. As much as $35 billion in lost sales could result by 2023. Just when small business owners could look forward to easing regulatory and tax burdens, they will see premiums rise by $523 more per family coverage policy in 2018 if Congress doesn’t act swiftly on a HIT repeal.
Americans were rightfully buoyed by recently-enacted tax reform legislation and its elimination of the costly individual mandate penalty, but other aspects of Obamacare continue to plague taxpayers and the economy. The countdown to a New Year has come and gone, heralding the arrival of the HIT.
Fortunately, new legislation offers hope — last month, Republican Members of the House Ways and Means Committee offered a package of bills to “deliver immediate, targeted relief from Obamacare taxes that will be in effect in 2018.”
While it may be too late to stop the HIT from taking effect, it’s certainly not too late to minimize the damage. In 2015 Congress recognized the adverse effect the HIT tax would have on families and businesses already struggling to make ends meet and approved a one-year moratorium of the tax for 2017.
That history can easily repeat itself now. H.R. 4620, introduced by Rep. Kristi Noem (R-SD), provides relief from the Health Insurance Tax through 2019; and H.R. 4619, introduced by Rep. Carlos Curbelo (R-FL), provides needed a two-year hiatus from the HIT for health care plans regulated by Puerto Rico. Now that the tax has taken effect, however, Washington needs to take an additional step: any legislation should stipulate that the premium hikes caused by the HIT are rebated to the seniors, small businesses, and other consumers who have been suffering financially because of it.
Congress has proven it can lead on tax reform. The economy has responded optimistically to the new opportunities for employment, investment, and earnings. It is crucial for leaders on both ends of Pennsylvania Avenue to make smart decisions that will support this momentum – and avoid becoming complacent about “hidden” policies that could throttle economic progress.
This Friday the federal government will approach a new funding deadline to avoid a shutdown; legislation to address that deadline would be the ideal vehicle roll back and rebate the HIT. Tacky sweaters and brick-hard fruitcakes are holiday disappointments that many of us learn to live with; but we need not, and should not, tolerate unwanted “presents” from Washington that keep taking from our pocketbooks all year long.
Pete Sepp is president of National Taxpayers Union (ntu.org), a nonpartisan citizen group founded in 1969 to work for lower taxes, limited government and economic freedom at all levels.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.