Lawmakers should use the remaining six weeks of the year to pass much needed relief from the Obamacare health insurance tax and medical device tax and expand health savings accounts.
When it was signed into law, Obamacare imposed a trillion dollars in new or higher taxes on the American people. These taxes included a tax on Americans facing high medical bills, taxes on health savings accounts, a tax on innovative medicines, and a tax for failing to buy health insurance. They have all caused significant harm to middle-class and low-income families across the country.
In the long term, lawmakers must continue working to repeal all one trillion in Obamacare taxes and passing reforms to get the government out of healthcare so that Americans can have better access to lower cost, higher-quality health care.
More immediately, the lame duck period is a prime opportunity to repeal or delay the health insurance tax and continue to delay the medical device tax. Lawmakers can also strengthen healthcare freedom and choice by expanding HSAs for American families across the country.
The Obamacare health insurance tax is scheduled to go into effect in 2020. Insurers plan their premiums months in advance, so if Congress fails to act soon, the tax will harm more than 141 million consumers, including those in the individual market, large and small group plans, Medicare Advantage and Medicare Part D plans. In total, the tax hits 11 million households that purchase through the individual insurance market, and 23 million households covered through their jobs.
If the HIT does go into effect, it is estimated that the tax will increase premiums by 2.2 percent per year and by almost $6,000 over the next decade for a typical family of four with small or large group insurance. This tax is also highly regressive – half of the HIT is paid by those earning less than $50,000 a year.
The tax would also exact an enormous burden on small businesses and our economy. It is estimated to directly impact as many as 1.7 million small businesses. The National Federation of Independent Business estimates the tax could cost up to 286,000 in new jobs and cost small businesses $33 billion in lost sales by 2023.
77 percent of registered voters support delay or full repeal of the Health Insurance Tax, according to polling released by Morning Consult. Congress should act as soon as possible to repeal or delay the health insurance tax. Fortunately, the House has already put forward proposals to repeal and delay this tax. Congress should swiftly move forward on this legislation.
Lawmakers should also expand access to tax-advantaged Health Savings Accounts. Not only will this offer Americans important tax relief, it will also expand healthcare freedom. Today, 25 million American families and individuals save and spend their own money tax free on a variety of healthcare expenses, more than two times the amount of individuals that use Obamacare exchanges.
The Republican-controlled House has already passed legislation that would double the contribution limit for an HSA, as well as allow individuals with a bronze or catastrophic health care plan to be eligible for an HSA. The proposal also expands access to HSAs by allowing working seniors enrolled in Medicare Part A to contribute to an HSA and allows HSAs to be used to purchase over-the-counter medications and fitness expenses.
These HSA reforms are in stark contrast with Obamacare’s top-down, command and control model and will empower individuals, lower health care costs, strengthen retirement security, and cut taxes for hardworking middle class Americans.
Finally, Congress should further roll back the Obamacare medical device tax, which is scheduled to go back into effect in 2020. The medical device tax is imposed as a 2.3 percent excise tax on all manufacturers including the thousands of small businesses. Ultimately, this tax suppresses investment and costs jobs.
The medical device tax was disastrous when it was in effect under President Obama. Research indicates that the tax reduced medical device investment by $34 billion in 2013 and cost almost 22,000 jobs when it was in effect between 2013 and 2015.
In the past two years, Republicans have made significant progress towards reforming the health care system. Most notably, Republicans repealed the individual mandate tax that was crushing middle and lower-class families that couldn’t afford health care. Obamacare’s most famous tax was a blatant war on the middle class, with 79% of individuals affected by the tax making $50,000 or less, and 37% of people affected by the tax making $25,000 or less.
The Trump Administration also recently issued a slew of new rules through the Department of Labor and the Department of Health and Human Services that strengthened health care choice and access to care for employees and employers. The new rules expanded health reimbursement accounts so that small- and medium-sized employers can easily offer their workers an HRA to pay $1,800 of medical expenses per year. The new rules also allowed small businesses to band together and form association health plans.
While these are significant wins, the GOP should not let the lame duck session pass without building on their success. The Health insurance tax should be delayed or repealed outright, HSAs should be expanded, and the medical device tax should be rolled back.