The scheduled return of an Obamacare tax on insurance premiums in 2018 would cost New Yorkers $1.1 billion in the first year, according to an industry-sponsored report published this week.
The report by the consulting firm Oliver Wyman, commissioned by the insurer UnitedHealth Group, estimates the tax would increase premiums by 2.6 percent overall and add $22 billion to health costs nationwide.
Nationally, the tax would add $158 to $188 the annual price of individual coverage, $500 to $535 to family coverage, $245 to Medicare Advantage plans, and $181 to Medicaid managed care plans, the study found.
The tax, known as the health insurance tax or HIT, was levied beginning in 2014 as part of President Obama’s Affordable Care Act. A federal budget deal suspended it for one year only, a hiatus that runs out on December 31.
The study warned that the reimposition of the tax in January would contribute to rising costs that are pushing more individuals and employers to drop insurance and leading to higher deductibles and copayments for those who keep coverage.
Rather than imposing a fixed percentage rate, the HIT sets a target amount to be raised – $14.3 billion for 2018 – then pro-rates it against all fully insured premiums collected in the previous year. Because the HIT is not deductible against federal corporate taxes, insurers will have to raise premiums by $22 billion to cover the tab without taking a loss, the study said.
The tax also exempts employers that “self-insure,” effectively favoring the larger companies over small businesses and individuals who buy “fully insured” plans. The study predicted that more employers would respond by self-insuring, which would further boost the tax burden on those left behind.
The Oliver Wyman study is part of an insurance industry lobbying campaign that seeks to “Stop the HIT,” an idea that has received bipartisan support in the past.
For now, health plans are assuming the HIT will come back – and have baked it into their premium requests for 2018. In New York, plans cited the tax as one reason they’re seeking hikes averaging 16.6 percent for non-group coverage, and 13.5 percent for small groups. With open enrollment coming in November, regulators at the Department of Financial Services are due to approve or modify those requests in the next few weeks.
About the Author
You may also like
New York’s health benefits remain the second-costliest in the U.S.
New York's health benefit costs increased faster than the national average in 2020, leaving it with the second-least affordable coverage in the U.S.
The state's average total cost f Read More
The Health Department’s FOIL Responses Signal an Indefinite Wait for Pandemic Data
The quest for comprehensive data on New York's coronavirus pandemic hit a bureaucratic roadblock this week Read More
Health Research Inc. Turns Over its Payroll Records Despite Claiming To Be Exempt from FOIL
The full payroll records of more than 2,400 de facto state employees are available to the public for the first time after being released by Health Research Inc. Read More
New York’s Medicaid Rolls Kept Pace with a Nationwide Surge During the Pandemic
New York's Medicaid and Child Health Plus programs added three-quarters of a million enrollees during the coronavirus pandemic, roughly matching the pace of a national surge in sign-ups. Read More
New York’s State Share of Medicaid Spending is Due to Jump 22 Percent This Fiscal Year
The state share of Medicaid spending is projected to jump 22 percent under the recently approved state budget, an unusually steep one-year jump for what is already one of New York's biggest expenditures. Read More
New York’s Hospital Industry Ranks Near the Bottom of Two Quality Report Cards
New York's hospitals remain near the bottom of two quality report cards. The state's hospitals received the lowest rate of any state except Nevada and DC. Read More
New York’s ‘Bluest’ Counties Have the Lowest COVID Vaccination Rates for Older Residents
New York's bluest counties are posting the lowest coronavirus vaccination rates for older residents, a striking contrast with the pattern in the U.S. as a whole.
The disparity appea Read More
New York’s ‘Single Payer’ Health Plan Would Disrupt Coverage for Out-of-State Commuters, Too
Under the latest version of the single-payer bill – which has broad support on Democrats in the Legislature – hundreds of thousands of commuters from other states would face the replacement of their current health insurance with a Medicaid-like plan funded with tax dollars and managed by Albany. Read More
Enjoying our work? Sign up for email alerts on our latest news and research.
Together, we can make New York a better place to live and work!