A House committee is debating whether to extend the delay on the Affordable Care Act's health insurance tax. It's leaning toward favoring Medicare Advantage and individual market plans over Medicaid managed care plans and small-group plans.
Talks in the House Ways and Means Committee are in flux, but the current one-year delay for Medicare Advantage and individual market plans—but not for Medicaid or small-group plans—would extend into 2018, an industry lobbyist said.
The committee's ranking Democrat, Richard Neal of Massachusetts, told reporters Thursday that though talks are fluid, committee staff disagree over how long some delays should go and how the billions in lost revenue should be offset.
He emphasized that the debate isn't acrimonious. On whether any delays would take effect next year, Neal said: "We're going to wait and see."
The health insurance tax (HIT) is set to resume for all types of health plans on Jan. 1, 2018 after a one-year suspension, even as insurers press Congress to repeal it entirely.
America's Health Insurance Plans said the tax on small group plans will raise premiums for families in that market by $7,000 over the next 10 years. A 2015 Oliver Wyman analysis done for AHIP estimated $87 billion in total savings for insurance consumers in all types of plans from 2017 to 2020 if the tax were eliminated.
Ways and Means committee members say talks on what to do with the tax are just starting and are still at the staff level.
There appears to be bipartisan support for delaying or repealing some ACA taxes, even though that would reduce revenue to pay for the ACA's premium subsidies and Medicaid expansion.
The Congressional Budget Office estimated in May that repealing the HIT would reduce federal revenue by $144.7 billion over 10 years.
Neal said Congress' intense focus on the GOP tax cut bill—which is heading into a House-Senate conference committee—is overshadowing budget details the parties will have to agree on in the next spending bill in December to keep the government open.
The ACA tax delays are a relatively minor element in the end-of-year agreement as Democrats and Republicans stake out their positions in the scramble to get another budget agreement before Christmas. That bill would keep the government open and fund key expired programs including the Children's Health Insurance Program, federally qualified community health centers, and various smaller Medicare programs.
Meanwhile, a range of powerful interest groups are pushing for delay or repeal of other ACA taxes, including the so-called Cadillac tax on high-value employer plans and the 2.3% excise tax on sales of medical devices. Some Democrats have expressed support for repeal of these taxes. That could further complicate the end-of-year deal.
The CBO said delaying the Cadillac tax until 2026 would cost the government $66 billion, while wiping out the device tax would cost $19.6 billion over 10 years.