The Daily Dose
Feeling the HIT from Taxes and Mandates
Vacation season is here. A time of year when we get away from the grind and make memories with family. It gives us a chance to breathe and refresh before we return to our daily lives and get back to work.
Likewise, a federal tax that has a big impact on health care costs has been on vacation. Unfortunately, it came back, and health care consumers are about to feel the hit.
The so-called Health Insurance Tax (HIT) requires health plans to pay a hefty fee of $145 billion over 10 years. This unfair tax is used to prop up the Affordable Care Act by funding federal and state marketplace exchanges.
Last summer, in recognition of the growing impact of the tax, Congress approved a one-year moratorium, but it has been reinstated for 2020.
According to an analysis by Oliver Wyman Actuarial Consulting, the astronomical fee will result in premium increases of 2.2 percent in 2020, translating to an estimated average annual premium increase of $479 per family for small businesses, $458 per family for large businesses, $241 for Medicare Advantage members, and $157 for each Medicaid enrollee.
Health insurance rates were recently approved by the state, and there’s a good chance you’ll be paying a higher premium in 2020. Is it hard to see why? The onslaught of federal and state taxes crushing the industry are destined to trickle down to the consumer – a fact not lost on lawmakers who impose countless mandates and fees on insurers and, ultimately, you, the taxpayer.
At a time when CDPHP and other insurers are working diligently to reduce health care costs for consumers, the return of the HIT feels like a punch to the gut. And that’s not the only added cost here in New York.
New York state mandates are also delivering a blow to health insurers and taxpayers for 2020.
The in-vitro fertilization (IVF) mandate, enacted in the 2020 New York state budget, requires coverage of IVF treatment by certain large-group plans, and egg freezing by all private insurance plans.
According to a report commissioned by the New York State Department of Financial Services, the IVF mandate will have a premium impact of approximately 0.5 to 1.1 percent, depending on the region and benefit design.
While some consumers will certainly benefit from the coverage, we must be aware of the heightened premium impact.
I’m a cardiologist by trade, not a mathematician, but between the HIT and the IVF mandate, that looks like a roughly 3 percent premium increase for New Yorkers – before the added and growing costs of hospital, physicians, and other providers are figured in.
The HIT and IVF mandate are but two of many taxes and regulations making premiums soar. And remember, those are far from the only drivers of rising health care costs. I’ve talked about the impact of drug prices and hospital consolidation before, and those forces remain as problematic as ever.
That doesn’t mean we’re waving the white flag. Taxes and regulations are nothing new in the health insurance industry. It simply means we have to get smarter and more creative in finding ways to alleviate cost increases.
As the HIT returns from its vacation, we’re already hard at work. When you take a look at your health plan for 2020, you’ll probably notice more programs and services than ever designed to keep you healthy, increase price transparency, provide better access to care, and improve quality while ultimately lowering costs.
John D. Bennett, MD, FACC, FACP About the Author
John D. Bennett, MD, FACC, FACP, is president and CEO of Capital District Physicians’ Health Plan, Inc. (CDPHP), an award-winning, physician aligned, not-for-profit health plan based in Albany, NY. Bennett has held the position since 2008 after serving more than 10 years as chair, vice chair, and board member for CDPHP. During his tenure, CDPHP has been ranked among the top-performing health plans in New York and the nation, most recently named #1 in Customer Satisfaction in the 2023 J.D. Power Member Health Plan Study. Under his leadership, CDPHP has also become known as a model employer regionally and nationally and was recently named among the top five Best Companies to Work for in New York by the Society for Human Resource Management, as well as Forbes Best-in-State Employers 2022. Prior to joining CDPHP, Bennett served as founding member and CEO of Prime Care Physicians, PLLC. During his tenure, he co-led a team of 25 cardiologists and helped grow the practice to a 100-physician multi-specialty group. Bennett is board certified by the National Board of Medical Examiners and the American Board of Internal Medicine, with subspecialties in internal medicine and cardiology. He earned his medical degree at SUNY-Downstate Medical Center, Brooklyn, and a Bachelor of Science degree at Rensselaer Polytechnic Institute. Bennett completed an internship and residency in internal medicine and a fellowship in cardiovascular disease at Albany Medical Center. He is a Fellow of the American College of Cardiology and the American College of Physicians. Bennett is currently board chair for the Center for Economic Growth and the Capital Region Chamber, and vice chair for the Palace Theatre. Bennett also serves on the boards of the New York eHealth Collaborative (NYeC), the Alliance of Community Health Plans (ACHP), America’s Health Insurance Plans (AHIP), Rensselaer Polytechnic Institute, and Russell Sage Colleges. Bennett is a member of the New York Public Health and Health Planning Council where he helps shape decisions related to New York State's public health and health care delivery system. Well-known locally and nationally for advancing health care innovation, Bennett was recently named to Crain’s New York Business 2021 Notable in Health Care, as well as the Albany Business Review’s Power 50 list.
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