Texans Taking a HIT from Onerous Health Care Tax
Five years after it was signed into law, the Affordable Care Act has opened the doors to health care coverage for millions of Texans and Americans who were previously uninsured. But unfortunately, this enhanced access has not come without a price. Across the country, premiums have been rising, putting the pinch on family budgets. According to the Kaiser Family Foundation, average family premiums rose from $13,375 in 2009 to $16,834 in 2014. That’s a $3,459 increase. A Washington Post analysis in 2014 found that while consumers have increasingly more options when shopping for health care, 25 states using the federally facilitated marketplace had higher average premiums last year for the most popular level of health plans – the “silver” level.
What is the HIT?
Those numbers are likely to continue their upward trend, thanks to a little-known tax with a major price tag that is bearing down on America. The health insurance fee, also known as the health insurance tax or HIT, is a $145 billion tax on the purchase of health insurance. It is levied on health insurance companies based on their “net premiums” written. In essence, the more people they cover (reflected in their market share), the more they are taxed.
Supporters of the tax like to focus on it being a tax on the health insurance industry. It’s an effective messaging strategy, given that most individuals would not lose too much sleep over another tax on a major industry. But the part that supporters of the HIT tend to leave out is who the tax directly impacts: families with health insurance. The non-partisan Congressional Budget Office has confirmed that the HIT will be “largely passed through to consumers in the form of higher premiums for private coverage.”
What began as an $8 billion tax in 2014, the HIT increases by 40 percent this year, and will nearly double over the course of the next few years to $14.3 billion in 2018. It’s designed to increase throughout the rollout of the health care law. And it’s the kind of tax Washington likes best – one with no expiration date.
Who Really Pays for the HIT
A tax of this magnitude does not absorb into thin air. A study by former CBO Director Douglas Holtz-Eakin shows that over 10 years, the HIT could increase the average family premium by $5,000. In Texas, premiums could increase by up to $2,600 for individuals and up to $7,500 for families over 10 years, according to the actuarial firm Oliver Wyman.
While families will be hammered by the HIT, small businesses will bear the brunt because the HIT only taxes the fully insured market, which is where nearly 90 percent of small business owners find their coverage. Because small businesses are typically too small to self-insure, they often pool together with other small businesses to purchase health insurance. Not only will premiums increase for small business employees and their families under the HIT, their employers can also expect to lose $2.5 billion in sales by 2023 as a direct result of the tax.
Polls already tell us that health care is a top concern for small business owners, who happen to be the number one job-creators in the country. With the economy recovering at a fragile and modest pace, now is not the time to place more burdens on the sector that has the greatest potential to help our nation rebound. A growing bipartisan chorus in the U.S. Congress agrees. A majority of U.S. House members now support legislation to fully repeal the HIT, and momentum is building behind a similar measure in the U.S. Senate.
HCR 89 Urges Congress to Repeal the HIT
Here in Texas, State Rep. Dade Phelan has proposed a continuing resolution (HCR 89) that would send a strong, united message from the Texas Legislature to Congress to swiftly repeal the health insurance tax. The Texas Association of Health Plans and a wide coalition of small business leaders like the Texas Association of Business applaud Rep. Phelan and efforts on the federal level to do away with this onerous tax.
We also encourage the Texas Legislature to continue to work with us to develop common-sense solutions to provide Texans with greater access to higher-quality care that is also more affordable. At the end of the day, we owe it to Texans to be sure the Affordable Care Act actually creates care that’s affordable. Anything else is a disservice to Texans and Americans across the country.
Additional Resources on the HIT
Impact of the HIT on Texas
- According to analysis by the actuarial firm Oliver Wyman, the HIT will:
- Impose a $7 billion fee on Texans over 10 years.
- Cut future private sector employment in Texas by 14,500 jobs by 2023.
- Result in $2.5 billion in Texas small business sales losses by 2023.
- Increase premiums for individual Texans by up to $2,639 over 10 years.
- Increase Texas family premiums by up to $7,506 over 10 years.
- Increase Medicare Advantage plan premiums for seniors by an average of $4,033, coupled with reduced benefits, over 10 years.
TAHP has produced the following materials in support of HCR 89 and federal efforts to fully repeal the HIT:
HEALTH PLAN MEMBER HIGHLIGHTS
Cigna Foundation Awards $150,000 World of Difference Grant to Houston YMCAs to Offer Innovative Arthritis Treatment Program for Seniors
The Cigna Foundation recently announced that it is awarding a $150,000 World of Difference grant that will enable the Greater Houston YMCA to launch their Enhance Fitness Program within their communities. EnhanceFitness is an evidence-based physical activity program proven to increase the physical, mental and social functioning of older adults – particularly those with arthritis. The Houston Y Association will be piloting the program at several of their area YMCA facilities, with the goal of eventually bringing it to other branches and even into the community at locations other than YMCAs.
According to the Centers for Disease Control and Prevention, 52 million Americans have arthritis, including about half of all adults over age 65. Almost 23 million Americans report that arthritis limits their physical activity. Research has shown that low-intensity physical activity performed on a regular basis can reduce pain, improve functioning, elevate mood and delay the onset of arthritis and other chronic disease.
Participants in EnhanceFitness take part in a series of classes from certified YMCA staff, including proven aerobic, strength training, balance and flexibility exercises that are safe, effective and modifiable for a variety of fitness levels. Fitness assessments will be conducted on a regular basis to track participants’ progress. In addition to physical benefits, the program will provide a fun, social atmosphere that fosters relationships between program participants.
Texas Children’s Health Plan Earns NCQA Accreditation
The National Committee for Quality Assurance (NCQA) has awarded Texas Children’s Health Plan the status of Accredited. NCQA Health Plan Accreditation evaluates how well a health plan manages all parts of its delivery system—physicians, hospitals, other providers and administrative services—in order to continuously improve the quality of care and services provided to its members.
“Earning the National Committee for Quality Assurance Accreditation status is a testament to our commitment to providing exceptional care to our members and the hard work of our employees. Texas Children’s Health Plan is very proud to earn the accreditation,” stated Christopher Born, president of Texas Children’s Health Plan.
Health Plan Accreditation performance results are publicly reported in five categories: access and service, qualified providers, staying healthy, getting better and living with illness. The standards are purposely set high to encourage health plans to continuously enhance their quality. No comparable evaluation exists for fee-for-service health care. NCQA Accreditation not only involves a rigorous review of a health plan’s consumer protections and quality improvement systems, but also requires health plans to submit audited data on key clinical and service measures (e.g., mammography screening rates; advising smokers to quit; consumer satisfaction) in order to achieve the highest levels of accreditation.
NCQA is a private, non-profit organization dedicated to improving health care quality. NCQA accredits and certifies a wide range of health care organizations. It also recognizes clinicians and practices in key areas of performance. NCQA is committed to providing health care quality information for consumers, purchasers, health care providers and researchers.
May Legislative Birthdays
5/4 Rep. John Cyrier
5/11 Rep. John Kuempel
5/15 Rep. Mary Ann Perez
5/17 Rep. Cecil Bell
5/18 Rep. Sarah Davis
5/22 Rep. Tan Parker
5/23 Rep. Jose Lozano
5/27 Rep. Gilbert Pena
5/29 Sen. Charles Schwertner
5/30 Rep. Hubert Vo