Another Health Tax that Doesn’t Pass the Cost-Benefit Test

September 24, 2012
8:42 am

We’ve commented on this space previously about the damage that is and will be inflicted by the medical device excise taxes contained within the Patient Protection and Affordable Care Act (PPACA).  We’ve already seen companies announce layoffs of employees to pay for the tax, and it’s impossible to calculate the number of startup companies that won’t be sending new innovations to market because of a tax applied to revenues, not profits.

Now, Congressman Charles Boustany (R-LA) is reminding his colleagues of another tax that is part of PPACA, one that will make health coverage more expensive at a time in which we need to be emphasizing affordability.  He announced Friday that he has 218 cosponsors for his legislation to repeal the tax.

The health insurance tax, assessed on health insurance companies based upon their ‘net premiums,” is expected to raise $87 billion between 2014 and 2019.  The Congressional Budget Office has projected that these taxes will likely result in higher premiums for privately-insured  businesses and individuals, with the average family seeing as much as a $500 increase per year according to a recent study by former CBO director Douglas Holtz-Eakin.

The broader issue of fees, taxes and reduced reimbursements on various health sectors contained within PPACA is an issue that Congress needs to reexamine.  These taxes and payment cuts are essentially moving public policy in the opposite direction of the goals our country most needs to achieve – greater job creation and more affordable healthcare.

The medical device tax repeal has already passed the House and, according to Congressman Boustany , a majority of Representatives are poised to do the same with the health insurance tax.  The Senate leadership did not allow a vote on the medical device repeal and one could surmise that the legislation doing away with the health insurance tax, should it pass the House, would meet the same fate.   Hopefully, when Congress returns to work after the elections or in 2013, we’ll see action to remedy these counterproductive provisions of PPACA.

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