The Senate returned from its August recess, and health care concerns continue to loom. The Senate Health, Education, Labor and Pensions (HELP) Committee kicked off a series of hearings exploring weaknesses of the individual insurance market that have developed as a result of the Affordable Care Act (ACA). Because a legislative effort to repeal and replace the ACA failed in the Senate in July, these hearings signal a fresh start and a bipartisan approach to building consensus on health care reform.
HELP Committee members heard testimony from state insurance commissioners about the long-term viability of the ACA and impacts on the individual insurance market. Sen. Rand Paul (R-KY) raised the importance of ensuring Americans have the best insurance options by allowing for association health plans, a policy the National Association of Manufacturers has long advocated.
Tomorrow, governors from Massachusetts, Montana, Tennessee, Utah and Colorado will share their perspectives with the HELP Committee in a second hearing.
Next week, a cross-section of health care stakeholders and insurance providers will testify before both the Senate Finance Committee and the Senate HELP Committee to discuss the larger implications of instability in the individual insurance market.
More than 175 million Americans—nearly half of the nation—rely on employer-sponsored health coverage. Manufacturers fear that a potential destabilization of the individual health insurance market will spill over into the employer market by raising costs for others. Congress should be making it easier for employers to provide health benefits to their employees, not more difficult.
The lack of decisive action on health care in the Senate now means there are two key ACA-related taxes that will go into effect in 2018 if not delayed or fully repealed by the House and Senate following return from August recess. Manufacturers used the August recess to urge Congress to address these taxes well before they go into effect.
A new Oliver Wyman report released this summer demonstrates the Health Insurance Tax (HIT) will result in higher health insurance premiums totaling $22 billion for more than 100 million Americans nationwide. This ACA tax will be paid by many, including those who are “fully insured,” meaning those employers who work directly with insurance brokers to purchase employee health plans. Even retirees who are accessing insurance through Medicare Advantage programs will be hit by the HIT. For manufacturers who are fully insured and those purchasing individual plans, this tax only adds to rising costs and higher premiums for employees.
According to the Oliver Wyman report summarized here, the HIT could raise the cost of premiums by an additional $540 for employees’ families receiving health benefits from fully insured larger employers. Small business owners and their employees could shoulder an additional $500 for family coverage as a result of the HIT. These cost increases are preventable if Congress acts.
Regrettably, it’s not just the HIT. The medical device tax—another tax that discourages innovation, growth and jobs creation—is ready to go into effect next year. In 2015, a temporary suspension of the 2.3 percent excise tax on medical device manufacturers was enacted after 29,000 jobs were lost as a result of the misguided tax. However, that two-year relief runs out at the end of 2017, making full repeal of this tax critical to manufacturers of medical devices. Manufacturers support immediate action to permanently repeal the medical device tax to prevent this tax from eliminating jobs and hurting local economies in all 50 states.
It was unfortunate that the Senate did not pass major health care reform legislation in July, but manufacturers urge the Senate not to give up its efforts, and the hearings over the next two weeks are a good start.