Donelon to Congress: Suspend Health Insurance Tax

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Louisiana Insurance Commissioner Jim Donelon is urging members of Louisiana’s Congressional delegation to support legislation pending in Congress that would again suspend the Health Insurance Tax (HIT) that was imposed by the Affordable Care Act, also known as Obamacare. The tax is a percentage of premium collected by health insurers and was suspended by Congress for the 2017 plan year.

“That tax is dollar-for-dollar paid by every policyholder of health insurance in this state,” Donelon said. “The passage of this tax has caused a rise in health insurance premiums as all premium taxes are passed directly to policyholders.”

The actuarial firm Oliver Wyman has estimated that Louisiana policyholders would pay higher premiums in the amount of $377 million due to the tax, which works out to approximately $500 in higher premiums for every family every year.

“It’s not just commercial health insurance policyholders that get hit, either,” Donelon said. “Medicare Advantage plans and even the state’s Medicaid plans are taxed as well.” It is currently estimated that Medicare Advantage premiums will rise approximately $576 per couple next year due to the HIT.

“With the passage of Obamacare, we have seen premiums rise dramatically every year. Our individual market will see premiums go up an average of 18.5 percent next year. If you get your health insurance through your employer, in the group-employer market, your premiums will go up an average of 7.5 percent next year,” Donelon said. “This is on top of similar big ticket rate increases that we have seen for the four prior years. I’m urging members of Congress to slow those health insurance increases by suspending or, better yet, repealing the HIT,” Donelon added. The HIT portion of those increases can be reduced during the upcoming plan year if Congress again suspends or repeals it.

Insurance Commissioner Jim Donelon does not have the authority to approve or disapprove health insurance rates, but his office receives informational filings. Several health insurers have indicated that if the HIT is suspended for 2018, they will file rate changes to lower rates during the year.