An onerous provision of Obamacare — the so-called Affordable Care Act — was delayed until 2018, but it’s about to hit with a nearly 3 percent tax on health insurance plans.
Alaska is one of the states that will get hit the hardest by the “health insurance tax,” known aptly as the “HIT.”
Premiums in Alaska are expected to increase by between $300 and $500 per insured individual per year in 2018 as a result, and even more in later years.
WHAT’S THE BACKGROUND?
Under Obamacare, every insurer that offers fully insured health insurance must pay what the federal government calls the health insurance provider tax.
The tax is supposed to fund the now nearly monopolistic health care markets, or “exchanges,” as the federal government calls them, although there are so few providers that the term “exchange” is euphemistic at best.
The exchange in Alaska is just Premera Blue Cross and it serves individuals and families who are not covered by an employer plan, Medicaid, or Medicare. Up to 18,000 Alaskans are covered by this insurance company, as Obamacare also levies tax penalties on those who don’t purchase coverage.
In 2017, Congress approved a one-year delay on collecting the HIT tax, but that delay expires on Dec. 31.
WHAT HAPPENS IN JANUARY?
If Congress does not eliminate the HIT, people buying insurance will see pass-through costs that will raise their rates. Premiums will increase by about 2.7 percent in 2018, and every year after that will go up between 2.6 and 2.8 percent.
Over 10 years, this will mean premiums will increase over $5,000 per person in Alaska’s individual market, to over $7,000 per family. Also, Medicare Advantage members will see their costs go up by over $3,000 and Medicaid enrollee’s costs will increase by a similar amount, which varies state to state. That latter increase gets passed along to taxpayers, not to Medicaid enrollees.
The tax will raise $14.3 billion for the federal government so it can run the federal health care exchange.
- The tax burden’s impact on insurance premiums for small employers that are fully insured will be enormous, while self-insured companies and State of Alaska employee plans will not be required to pay the tax.
- More younger and healthier people may simply avoid purchasing health insurance, which will destabilize rates as more of the insured pools will be made up of sicker people.
- The health insurance tax also applies to Medicare Advantage, Medicare Part D, and Medicaid Managed Care.
In Alaska insurance rates will climb in 2018:
- Single: $386 per year
- Small group single: $263 per year
- Small group family: $632 per year
- Large group single: $238 per year
- Large group family: $661 per year
- Medicare Advantage: $269 per year
- Medicare PDP: $21 per year
By 2027, this will result in total increases to Alaskans:
- Single: $5,554
- Small group single: $3,257
- Small group family: $7,820
- Large group single: $2,945
- Large group family: $8,179
- Medicare Advantage: $3,321
- Medicare PDP: $266
(Source: Oliver Wyman analysis and report commissioned by United Health Care)
WHO DOESN’T PAY THE TAX
According to the IRS, the following entities are exempt from paying the HIT:
- A self-insured employer
- A governmental entity
- Certain nonprofit corporations
- Certain voluntary employees’ beneficiary associations (VEBAs)
ALASKA DELEGATION’S ROLE
A bipartisan group of 400 members of Congress passed a delay of the HIT tax for 2017 for one year, with Sen. Lisa Murkowski as a co-sponsor.
Now, Senate Bill 1859, introduced by Sen. Cory Gardner of Colorado in September would need to pass before Dec. 31.
That leaves little time, since Congress will likely recess for the Christmas break on Dec. 14.
A host of Republican senators have co-sponsored SB 1859, including James Inhofe-OK, Tom Cotton-AR, Ron Johnson-WI, Rob Portman-OH, Jeff Flake-AZ, Roy Blunt-MO, John Barrasso-WY, Ted Cruz-TX, Dean Heller-NV, Tim Scott-SC, Roger Wicker-MS, Johnny Isakson-GA, Shelly Moore Capito-WV, John Kennedy-LA, Todd Young-IN, Mike Rounds-SD, and Chuck Grassley-IA.
Must Read Alaska has reached out to Murkowski and Sullivan and will update this report with their comments and perspectives. Senator Dan Sullivan has voted to repeal all of Obamacare. Sen. Lisa Murkowski is on record to repeal the individual mandate, but has not yet made public her position on the HIT tax.
Obamacare, the healthcare overhaul bill…err “tax” we had to pass to see what’s in it just keeps giving…err taking and taking.
This whole debate on who pays for the medical costs of folks who can’t afford to pay for medical services seems misdirected. One of our sons is a doctor. He says 25% of his time is spent dealing with excessive government and insurance company required paperwork to avoid being fined into bankruptcy. If we could eliminate that burden he could see 25% more people and thereby lower the cost by that same amount. Why are we not debating how to lower costs? Bob
If Murkowski had voted to reform Obamacare last month instead of being one of the Senators who made sure Alaska still is saddled with this health care fiasco we would not be in this situation today. Who does she think she represents???
So government employees, including school districts, are exempt from paying the tax! Why is that? It appears as if that was put into the ACA bill to get government unions to support it. Now the Cadillac tax has also been delayed because it would impose a 40% tax on most government health insurance which would kill Obamacare. Obviously, the Cadillac tax will also go away because of the negative impact on ACA.
I believe that the ACA and other laws and regulations that basically result in the federal government controlling virtually every aspect of our lives with increasing costs, reducing benefits and increasing federal control of our lives will destroy the genius of our constitutional system. Alaska is not Florida and Maine is not California.
What is appropriate for Alaska is best determined by Alaskans and the same applies to every other state.
With the one size fits all systems applied by federal bureaucrats writing the rules, the consequences of which are uniform in their adverse consequences, we will loose all of the benefits of different systems, methods, means developed in the various states. We will no longer be able to say “Hey, have to seen what they did in Missouri? Let’s try that here in Alaska.” A grand experiment in government will be strangled by the monolith which is the federal bureaucracy.
The foolishness of this system is depressing as the consequences will be catistrophic.
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