The Time is Right to Address Harmful Healthcare Taxes

There is still more speculation than certainty as to what will happen in the congressional lame duck session in the final weeks of 2018, but there is one easy step lawmakers should take before adjournment that would benefit both consumers and the innovative future of our nation’s healthcare system.

Two significant healthcare taxes are currently in a state of suspension.  The health insurance tax and the medical device tax were both delayed by previous legislation, but those suspensions will elapse at the end of 2019.  As health insurers are beginning to develop their rates for 2020 and medical device manufacturers are engaging in their own business planning, Congress would be wise to eliminate these counterproductive taxes altogether or, at the very least, extend their suspensions.

The impact of the health insurance tax, if activated at the end of 2019, has been documented by the Oliver Wyatt actuarial consulting firm.  Americans with virtually any form of health insurance will see a premium increase.  For example, families in either the large or small group markets would see their annual premiums rise by more than $450.  An individual in the non-group market would pay nearly $200 more.  Medicare Advantage enrollees would experience an average premium jump of $241.

There is no compelling reason to undermine the affordability of health coverage by allowing an unnecessary tax to resume.  Congress should act now, during the lame duck session, before insurers have to factor this tax into their 2020 premium rates.

Likewise, the medical device tax is an ill-conceived measure that needs to be dismissed.  It is a 2.3 percent excise tax imposed on the sales of medical technology.  This tax on revenues, rather than profits, has a disproportionate impact on smaller start-ups and firms with relatively low profit margins.  The harmful impact of the tax has been clear and concerning.  It has diminished the dollars medtech innovators can direct to research and development and it has been the cause of lost jobs within the industry.

Support for doing away with these taxes, or at least suspending them for a longer period of time, is bipartisan.  There are no significant obstacles standing in the way of taking this action on behalf of current and future patients and healthcare consumers.  The lame-duck session of Congress would be a perfect time to do so.