About one-third of group health care plans would be affected by a
proposed 40 percent excise tax on insurers and third-party administrators
offering the highest-cost health plans by 2019, according to a congressional
analysis.
U.S. Rep. Joe Courtney, R-Connecticut, who requested that the Joint Committee
on Taxation analyze the provision in health care reform legislation that the
Senate Finance Committee passed last week, released the results Tuesday, October
20.
Under the provision, the excise tax would apply to that portion of a group
health care plan premium that exceeds $8,000 for individual coverage and $21,000
for family coverage. For plans covering early retirees and employees in certain
high-risk professions, the tax threshold would be $9,850 for individuals and
$26,000 for families.
In 2013, the first year the tax would be imposed, the Joint Committee on
Taxation estimates that 19 percent of plans offering single coverage and 14
percent of plans offering family coverage would be affected by the excise
tax.
However, the analysis found that the percentage of plans affected would
increase steadily in succeeding years. By 2019, 34 percent of plans offering
single coverage and 31 percent of plans offering family coverage would be
subject to the tax.
Under the measure, the tax thresholds would rise in tandem with the annual
increase in the Consumer Price Index, plus one percentage point. However, the
Joint Committee on Taxation noted that medical inflation is expected to increase
even more and boost the percentage of plans affected.
While the tax would be paid by insurers and by third-party administrators in
the case of self-funded plans, it is likely that costs would be passed on to
buyers, according to the analysis.
“Generally, we expect the insurer to pass along the cost of the excise tax to
consumers by increasing the price of health coverage,” the analysis said.
Of five congressional committees that have passed health care reform
legislation this year, the Senate Finance Committee is the only one to include
an excise tax based on cost of coverage.
The Congressional Budget Office estimated earlier that the provision would
raise more than $200 billion over a 10-year period.
Filed by Jerry Geisel of Business
Insurance
= Member Only
