The ACA health insurance tax is likely to cost payers $16 billion by 2020 and may prompt higher premiums to make up the difference.
The Affordable Care Act’s health insurance tax is expected to levy $16 billion in fees for health insurers by 2020, leading payers to increase premiums by an anticipated 2.2 percent, according to a Oliver-Wyman report commissioned by UnitedHealth Group.
Currently, a federal moratorium on the tax is in place, but the hold is expected to expire in 2019. If the tax is reinstated, both the public and private insurance markets are likely to feel an impact.
The analysts predict that all 50 states and US territories will see additional premium charges of $20.3 billion for plan year 2020.
Premiums are expected to increase by $196 per person annually in the individual market, $154 in the small group market, and $158in the large group employer market. Family health plan premiums are expected to increase by $479 in the small group market and $458 in the large group market.
The analysts at Oliver-Wyman found that premium increases could be significant for commercial health plan members within the next ten years as payers continue to offset HIT fees.
Members with individual health plans purchased through the exchanges face ten-year premium increases totaling $2473 per person. Family health plans face ten-year premiums of $5824 in the small group market.
The HIT is also likely to drive up premiums within the managed Medicaid and Medicare Advantage insurance markets.
MA members are expected to see a $241 annual increase in premiums while managed care beneficiaries are expected to experience a $157 annual increase in premiums. Over ten years, premiums to offset HIT fees will increase by $3052 per Medicare Advantage member and $1988 per Medicaid managed care member.
Roughly 17 million individual health plan enrollees and 14 million small group enrollees will be impacted by these increases. Just under 36 million large group plan beneficiaries are expected to see higher bills.
In addition, premium increases will create additional cost challenges for 20.9 million MA beneficiaries, 25.7 million Medicare prescription drug plan enrollees, and 27.7 million Medicaid managed care members.
An increase in insurance premiums is likely to exacerbate adverse selection and discourage beneficiaries from enrolling in health plans.
Payers can help address cost concerns for their beneficiaries by developing specialized cost sharing programs that create affordable benefits. However, addressing the potential billions in HIT fees may require greater efforts such high-level policy action from lawmakers.
Date: September 4, 2018
Source: Health Payer Intelligence