NC Treasurer Dale Folwell says that the Obamacare health insurance tax (HIT) may severely sting the state’s citizens.
In a recent statement provided by the treasurer’s office, it is noted that the tax had the potential to increase premiums on Medicare Advantage plans offered to the state’s Medicare eligible on the State Health plan, by approximately 30 percent in 2018, if not repealed.
During a July 26 press conference, Folwell and representatives of State Employees Association of North Carolina and North Carolina Retired Governmental Employees Association called on the North Carolina Congressional delegation to take the lead on extending the moratorium, or repealing the tax altogether.
Folwell also shared some good news. In what he described as a “herculean” effort on the part of his team at the state treasurer’s office and stakeholders, a decrease in premiums to $120 per month for an individual retiree on the State Health Plan for those who are subscribed to the Medicare Advantage basic plan for 2018 has been negotiated with United Health Care regarding.
— NC Treasurer (@nctreasurer) July 26, 2017
Additionally, Folwell says that if the Obamacare health insurance tax does get repealed or delayed for 2018, the state would save approximately $45 million more in 2018 related to the nearly 150,000 retirees covered by the Medicare Advantage plan.
While Folwell and team have worked to secure an actual premium decrease in spite of the HIT, the outlook on the horizon is gloomy for taxpayers and purchasers of insurance.
The global consulting firm of Oliver Wyman released a report on August 6 that breaks down the projected financial impact of the HIT for each state.
The report projects that North Carolina’s citizens and business will face approximately $365,777,000 in higher premiums as a result of the tax increase in 2018, and nationwide premiums will rise by approximately $14.3 billion due to the tax.
Since the passage of Obamacare into law, the HIT has been a subject of analysis and scrutiny. In 2011, the American Action Forum described the tax in great detail. Their report stated, “The Affordable Act imposes a fee on health insurers that amounts to a de facto ”˜health insurance premium tax’ that will raise the cost of health insurance for American families and small employers.”
Simply stated, the more health insurance a company sells, the more tax it will be required to send to the U.S. Treasury, based on its share of the overall market. Of course, the insurance company will not bear this burden, but will pass the tax along to its purchasers.
In the case of individuals this means a larger chunk of the family budget having to go toward paying for increasingly higher health insurance premiums. This will result in a reduction of spendable income to plow back into the economy for goods and services.
For small businesses that have the HIT passed along to them in the form of rate increases, it could mean lower if any increases to employee compensation, cutting jobs and passing higher premium costs along to its customers.
In 2013, David Burton of the Heritage Foundation published an article that explained larger companies will be able to avoid the shifting of the HIT to their insurance plans due to a large proportion of them being self-insured. Burton said, “It is generally agreed that the economic incidence of the tax will fall on consumers and small employers.”
Individuals might choose to opt out of the insurance and avoid the premium increases that the insurance companies’ shifting of the HIT into rate increases on their products. However, the individual mandate under Obamacare does that give individuals that choice without the possibility of adverse tax consequences.
It is important to note that Congress placed a moratorium on the HIT for 2017. The tax is slated to kick back in for 2018, unless lawmakers can agree to continue the moratorium or do away with Obamacare or the HIT altogether. For Folwell, this is a serious issue, one about which he said, “I hope the North Carolina delegation will take the lead.”