At the risk of interrupting our endless culture wars with some boring policy health policy news, congressional Republicans are on track to allow a brand new Obamacare tax to take effect next year, making health insurance even more expensive for millions of Americans. Beginning in January 2018, an Obamacare tax on health insurance plans for individuals and small businesses will go into effect—unless the GOP-controlled Congress delays it.
They’ve delayed it before. The tax was in place from 2014 to 2016, but in December 2015, Congress placed a one-year moratorium on collecting the tax for all of 2017, an estimated $13.9 billion. If the tax is allowed to go back into effect next year, it’ll be at a higher level, hauling in an estimated $14.3 billion and affecting more than 11 million households buying insurance on the individual market and 23 million households who are insured through small employers.
The reason it’ll be higher next year than it would have been this year is that the tax isn’t imposed at any specified rate because its purpose is to raise a set amount of revenue. So the Treasury sets the rate every year to ensure it raises the right amount. This chart from the Heritage Foundation shows how it’s supposed to work:
Because the tax is technically paid by insurance companies, not consumers, it’s effectively a hidden tax. Individuals and small businesses will only feel the effects of the tax in the form of higher premiums, which will increase by about 2.6 percent next year as a direct result of the tax. That works out to about $160 per person on the individual market and $500 per family on the small group market.
So will Republicans delay it again? Last month, Sen. Ron Johnson and ten other GOP senators introduced a bill that would delay the tax yet again. Sen. Ted Cruz, one of the bill’s co-sponsors, has been pushing for a delay for months now. In the House, Republican Rep. Kristi Noem of South Dakota and Democratic Rep. Kyrsten Sinema of Arizona are leading a bipartisan effort to do the same.
Since they can’t seem to repeal Obamacare, delaying this tax is the very least Republicans can do to blunt the deleterious effects of the health-care law. They could also take other steps short of repeal and replace, like weakening the individual mandate by expanding hardship exemptions and protecting seniors from new taxes on Medicare plans set to take effect next year.
They probably won’t do any of that. Here’s hoping they can muster the courage and wherewithal to do the bare minimum and delay yet another Obamacare tax hike.