Perhaps, I am on the wrong side of the argument on how to control healthcare costs of which one proposed solution is a part of the latest budget bill passed in a bipartisan effort in Congress on December 19, 2019. Others may disagree with me on my thoughts.
What was passed was superficial and will not fix the rising cost of healthcare which drives increased healthcare insurance deductibles and premiums. Oh, and surprise billing in hospitals still lives! Fixing surprise billing was set aside by Congress.
The latest bill (H.R. 1865) to impact the ACA passed the House 297 to 120 and the Senate 71 to 23. In the bill, the Health Insurance tax will be repealed in 2021, the Cadillac tax in 2020, and the Medical Device tax in 2020. The repeal of the three taxes will result in the loss of a projected revenue of $373.3 billion over 10 years. The largest projected revenue loss will come from repeal of the Cadillac tax ($197 billion), followed by the Health Insurance tax ($150.8 billion), and the Medical Device tax ($25.5 billion).
All repealed for Congress to be able to say we pushed back on costs and helped to prevent the rising costs by blocking mandated tax increases. Except they also undercut the ACA and increased the annual deficit.
I am going to skip the history involved in the delays of these taxes and go right to my objections after I tell you what these taxes were expected to do.
Cadillac Tax: As Newsweek reported in 2017, the so-called “Cadillac tax” would have capped the tax deductions individuals could claim based on their health insurance benefits. It would have imposed a 40 percent excise tax on employer-sponsored plans that exceeded $10,000 in premiums per year for a single person or $27,500 for a family. The Cadillac tax was set (for the umpteenth time) to take effect in 2022. The reasoning for this tax was to capture special plans for Execs whose plans were hidden amongst the regular plans.
Health Insurance Tax: The CMS’ Office of the Actuary calculated that the net cost of private health insurance grew 15.3% in 2018, up from 9.5% in 2017, the biggest increase since 2003. The actuaries said this was driven largely by the temporary reinstatement of the Health Insurance tax, which was suspended by Congress this year. Actuaries can say what they wish too, except it ignores the last 10 years of increased healthcare costs untouched by this tax.
Medical Device Tax: The medical device tax was a 2.3 percent excise tax on gross sales of medical devices used by humans (not animals) such as x-ray machines and hospital beds. It was implemented in 2013 but had been suspended since 2015, according to the Tax Foundation. It was thought the increase in healthcare would spawn the sales f equipment (it has) and the revenue would subsidize the ACA.
Preventing the implementation of these taxes does “nothing” to forestall increasing healthcare insurance deductibles and premiums and healthcare costs. Also keep in mind, portions of the ACA were passed under Reconciliation, the loss of revenue from the tax cancellation may cause other cuts to the ACA as the ACA must be deficit neutral at 10 years which is 2020 (?). Fix the issue!
Past the leap, what will impact the rising costs and resulting prices of healthcare and healthcare premiums.