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Repeal of health insurance tax edges closer to reality

Repeal survived majority in House

The controversial health insurance tax (HIT)--a sales tax on health insurance that amounted to $8 billion last year and increased by 41 percent this year--may be on its way out.

Those who favor a tax repeal--a Republican-driven effort led by Sen. John Barrasso (R-Wyo.)--reached a majority of 218 backers in the House of Representatives this week, reported BenefitsPro. Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Sen. Pat Roberts (R-Kan.) co-sponsored Barrasso's amendment, added an announcement from America's Health Insurance Plans (AHIP).

AHIP has been all but quiet on the issue, pointing out that revenue generated by HIT negatively impacts small businesses, consumers and seniors, typically in the form of higher premiums, noted BenefitsPro.

A full repeal of the tax would save individual policyholders some $514 a year, with small group savings of $688 per year for family coverage and $719 per year for large group family insurance, according to BenefitsPro.

Insurers have not been too keen on the tax because it cutts into earnings. In 2013, Aetna CEO Mark Bertolini said the insurer would end up paying $600 million in fees as a result of the tax, FierceHealthPayer previously reported. But insurers have found ways to cope with paying the tax, such as raising premiums and shifting the feeds onto Medicaid members.

Should the tax remain, the fees will nearly double over the course of four years, hitting $14.3 billion in 2018, AHIP added.

For more:
- here's the BenefitsPro article
- check out the AHIP statement

Related Articles:
Insurers look for help to pay health insurance tax
Aetna: Medicare Advantage cuts, insurance tax will affect earnings