December 18, 2015 —

$142 Billion Tax Would Raise Health Care Costs For Texas Families

AUSTIN—The Texas Association of Health Plans (TAHP) today issued the following statement applauding U.S. Congressional passage of a tax-relief package that includes a one-year suspension (in 2017) of the health insurance tax (HIT).

The HIT is a $142 billion tax on health insurance. The tax started at $8 billion in 2014, increased by 40 percent in 2015, and will nearly double over the course of four years to $14.3 billion in 2018. The non-partisan Congressional Budget Office (CBO) has confirmed that the HIT will translate into higher health care costs for consumers, stating that it will be “largely passed through to consumers in the form of higher premiums for private coverage.” The Joint Committee on Taxation estimates that, because of the tax, health insurance premiums are “between 2.0 and 2.5 percent greater than they otherwise would be.” New analysis by the actuarial firm Oliver Wyman indicates a one-year suspension of the HIT could save individuals up to $350 in premium savings. Full repeal could save consumers on average up to $719 a year.

“Health care costs in Texas and across the country are on the rise, delivering a serious blow to the budgets of hard-working families, seniors and small business owners. The last thing hard-working Texans need is a burdensome tax on their health insurance that could cost them thousands of dollars in premium costs over the next 10 years,” said Jamie Dudensing, TAHP CEO and a former practicing nurse. “The Texas Association of Health Plans applauds the U.S. Congress for taking an important step today to postpone an unnecessary and expensive tax on Texans seeking health care coverage for themselves and their families. We will continue to support full repeal of the HIT, which directly drives up the cost of health coverage for Texans.”

Impact of the HIT on Texans

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 plans for seniors by an average of $4,033, coupled with reduced benefits, over 10 years.
  • Increase Medicaid health plans by 41,346 over 10 years.

Additional Background on the Health Insurance Tax

  • A 2014 analysis from NFIB estimates that the HIT will result in a reduction in private sector employment of 152,000 to 286,000 jobs by 2023, with 57 percent of the job losses coming from small businesses.  This will amount to a reduction of U.S. real output (sales) by between $20 billion to $33 billion during the same time frame.
  • Currently, legislation to repeal the HIT has bipartisan support in Congress with more than 270 co-sponsors (Senate – Barrasso-Hatch (S. 183); House – Boustany-Sinema (H.R. 928)).
  • TAHP supported HCR 89 in the 84th Legislative Sessions, introduced by State Rep. Dade Phelan (TX-21), which urged the U.S. Congress to approve legislation fully repealing the health insurance fee (HIT) included in the Affordable Care Act.

The Texas Association of Health Plans

The Texas Association of Health Plans (TAHP) is the statewide trade association representing private health insurers, health maintenance organizations, and other related health care entities operating in Texas. Our members provide health and supplemental benefits to Texans through employer-sponsored coverage, the individual insurance market, and public programs such as Medicare and Medicaid. TAHP advocates for public and private health care solutions that improve the affordability, access and accountability of health care for many Texans. As the voice for health plans in Texas, TAHP strives to increase public awareness about our members’ services, health care delivery benefits and contributions to communities across Texas.