Health Insurance Tax

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Our Position

Farmers and ranchers have two major concerns related to health insurance: cost and access. The new Health Insurance Tax increases health insurance costs for farmers, ranchers and other small businesses by imposing a levy on the net premiums of health insurance companies. This additional cost is passed on to consumers who obtain their health insurance through the fully insured market.

Farm Bureau believes that one of the primary goals of health insurance reform should be to reduce costs, and we oppose the HIT.  

Background

The HIT Tax was passed as part of the Patient Protection and Affordable Care Act (ACA). It has nothing to do with reforming the health care insurance system but was included in the ACA as a way to raise revenue to offset the cost of the legislation. The HIT, an excise tax levied on a health insurance company’s net premium, raised $8 billion in 2014, the first year the tax was collected, and $11 billion last year.

Most farmers and ranchers and other small businesses are not self-insured because they do not have a large enough pool of employees. Instead, small employers purchase health insurance in the fully insured market. Because fully insured health plans are the only plans that factor into the equation that determines how much HIT an insurance company pays, the cost of the tax is being passed through to small businesses that purchase those plans.

This new tax is pushing insurance costs even higher than they already are, making it harder for farmers and ranchers to purchase coverage for themselves, their families and their employees. A Congressional Budget Office (CBO) report confirms that the HIT “would be largely passed through to consumers in the form of higher premiums for private coverage.” A study by former CBO Director Douglas Holtz-Eakin indicates that the anticipated impact is as much as three percent-nearly $500 a year per family.

The consolidated appropriations bill that passed Congress in December 2015 imposed a one-year moratorium, for 2017, on the collection of the HIT. Since the cost of the tax increases year-over-year, Americans will see temporary relief in 2017 only to face an even higher HIT impact on premiums in 2018. Providing relief from the HIT is a welcome and critical first step, but Americans need the certainty of a full repeal.

Legislative Status

Farm Bureau supports:

  • Legislation to repeal the HIT, H.R. 246, introduced by Reps. Kristi Noem (R-S.D.) and Krysten Sinema (D-Ariz.)
  • Legislation S.1859 to delay the HIT for one year, introduced by Sen. Cory Gardner (R-Co.)
  • Legislation S. 1978 to delay the HIT for two years, introduced by Sen. Heidi Heikamp (D-N.D.)

Language to repeal the HIT was contained in House-passed H.R. 1628, The American Health Care Act of 2017.

AFBF Policy

Farm Bureau believes that one of the primary goals of health insurance reform should be to reduce costs. Farm Bureau opposes the HIT and supports its repeal. Until the HIT can be repealed, Farm Bureau supports an extension of the moratorium on the collection of the tax. 

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