TCC Letter to the Texas Congressional delegation: Repeal the Health Insurance Tax (HIT)

August 11, 2017

The Honorable Kevin Brady
The United States House of Representatives
301 Canon House Office Building
Washington, DC 20515

Dear Representative Brady:

We are writing you to urge you to take immediate action to lower health care premiums by repealing the Health Insurance Tax (HIT).

While we continue to support full repeal of Obamacare and reverse the negative effects the law has had on Texas families and businesses, in the near-term Congress can take an important step to address one of the worst effects of Obamacare – higher health care premiums, which continue to rise unabated. Indeed, the Department of Health and Human Services indicated that in 2017 alone insurers are set to raise the premiums for plans sold through HealthCare.gov by an average of 22 percent.

To help mitigate the rapid rise in cost, Congress should repeal the HIT (referred to by the Internal Revenue Services as the Health Insurance Provider Fee), which since 2014, has been imposed as an additional tax on the fully-insured market that serves most small business employers and those who purchase policies individually. The HIT is a fixed-dollar amount distributed across health insurance providers. $8 billion in 2014, $11.3 billion in 2015-2016, $13.9 billion in 2017, and $14.3 billion in 2018. However, in a December 2015 budget agreement, Congress consented to a one-year delay on the HIT for calendar 2017. In January 2018, absent action, the HIT will again be in effect. After 2018, the HIT rises according to an index based on net premium growth.

If the HIT continues to be levied, it would amount to a tax in excess of $140 billion over the next decade according to the Congressional Budget Office (CBO). The HIT directly impacts up to 1.7 million small businesses, 11 million households purchasing coverage on the individual insurance market, and 23 million households covered through their employment; as a result, the National Federation of Independent Business (NFIB) estimates that the HIT could cost the nation as many as 286,000 new jobs and lose small businesses $33 billion in sales by 2023. Despite the HIT’s major impact on individuals and small businesses, its structure mostly bypasses large corporations, unions, and governments.

H.R. 246 by Congresswoman Noem (R -SD) would repeal the HIT before it further damages the healthcare market. The resolution has 155 co-sponsors, including 15 members from Texas. We urge you to add your name as a co-sponsor.

As the conservative caucus of the Texas Legislature, we strongly urge Congress to take immediate action by passing H.R. 246.

Click here to see the letter with signatures.