Rep. Axne Announces Support for Bipartisan Bills to Lower Health Care Costs

WASHINGTON – Today, U.S. Rep. Cindy Axne (IA-03), a member of the House Affordable and Accessible Health Care Task Force, signed onto two bipartisan bills to lower the cost of health care premiums and save Iowa jobs. The so-called ‘Cadillac Tax’ and the Health Insurance Tax (HIT) were created as part of the Affordable Care Act, but their implementation has been delayed by Congress until 2022 and 2020, respectively. Rep. Axne today signed onto two bipartisan bills that would repeal these taxes permanently.

The Middle Class Health Benefits Tax Repeal Act of 2019 would repeal the ‘Cadillac Tax,’ which is a 40 percent excise tax on high-cost employer-provided health insurance plans. The Jobs and Premium Protection Act would repeal HIT, which is an annual fee on health insurers that was intended to help fund state and federal marketplaces. While both taxes are levied on insurance companies, if enacted, they would shift the burden to consumers by raising health care costs.

“I’ve said from day one that the Affordable Care Act isn’t perfect and that I’d work with anyone to fix it. If enacted, these taxes will drive up the cost of care for everyday Iowans,” said Rep. Axne. “These bipartisan proposals will help shore up the ACA and lower the cost of premiums and copays that empty workers’ wallets. It’s time to permanently repeal these taxes to increase stability in the marketplace and provide relief to Iowa seniors and working families as we continue to look for ways to improve our health care system.”  

Ken Sagar, President, Iowa Federation of Labor, AFL-CIO said: “The Iowa AFL-CIO applauds Representative Axne for taking action to repeal the HIT and Cadillac Tax. Healthcare is right for every American, and every working family deserves access to a high-quality, affordable plan.”

The Cadillac Tax:

The Middle Class Health Benefits Tax Repeal Act of 2019 would repeal the ACA mandated ‘Cadillac Tax,’ the 40 percent excise tax on the most expensive employer-provided health insurance plans. Employer-sponsored health benefits whose value exceeds $11,200 for single coverage and $30,150 for family coverage would be subject to the excise tax of 40 percent starting in 2022.

Although the tax is on insurance companies, the burden will be passed onto Iowa workers. Employers will likely increase workers out-of-pocket costs (higher deductibles, narrower networks and increased co-payments) or lower wages in order to cover the costs of higher premiums that insurance companies will charge to pay for the ‘Cadillac Tax.’

The Health Insurance Tax (HIT):

The Jobs and Premium Protection Act repeals Section 9010 of the Patient Protection and Affordable Care Act, known as the Health Insurance Tax (HIT). The ACA mandated an annual fee on health insurers, known colloquially as HIT, that was intended to help fund state and federal marketplaces. However, if enacted, insurers will shift the burden to consumers, increasing costs on nearly everyone in the marketplace, from seniors to small businesses.

In 2018, Congress approved a one-year moratorium on collecting insurer taxes for 2019. The moratorium is set to lapse in 2020 and according to America’s Health Insurance Plans, if implemented in 2020, HIT would levy $16 billion in fees on health insurers.

In order to make up for this lost, insurers are expected to increase premiums by 2.2%, which equates to approximately $196 increase per person in the individual market, $154 increase per person and $479 increase per family in the small group market, $158 increase per person and $458 increase per family contract in the large group market, according to a report from Oliver Wyman Actuarial Consulting.