Insurers’ new health repeal campaign

(AHIPCoverage.com) The insurance industry, alongside a small business group, launched today a new campaign to repeal one of its least favorite parts of health reform: a new, annual fee assessed on insurance companies. The fee starts at $8 billion in 2014 and then rises up annually to hit $14.3 billion in 2018.

America’s Health Insurance Plans, which lobbies for the insurance industry, says the provision will become a “premium tax” that gets handed down to consumers. “When you tax health insurance, you make health insurance more expensive,” AHIP Vice President Michael Tuffin, who oversees the group’s advocacy efforts, told me in an interview this morning. “This provision flies in the face of the goal of health reform: making health care more affordable.”

You can expect to hear this point repeated a lot soon. Today, AHIP and the National Federation of Independent Businesses launched a new Web site, “Say No to Higher Health Care Costs.” They’ve kicked off a letter writing petition. AHIP tells me they plan to roll out new Web videos and ads a little after Labor Day. That will be followed by a series of commissioned papers later in the fall that detail how much premiums would be raised for individuals and small businesses.

Does the insurance industry stand a chance of succeeding with this? It’s possible, but pretty unlikely.

To be fair, insurance companies do have the CBO on their side on this one. “We anticipate that these fees and the excise tax would generally be passed through to health consumers in the form of ... higher insurance premiums” it wrote of the insurer fee. There’s not a lot to stop insurers from passing the tax onto consumers in the Affordable Care Act. Its main provision to keep premiums down is the medical loss ratio, which bars insurers from spending more than 20 percent of premiums on administrative costs and profits. But federal taxes aren’t counted for that provision.

But there are a lot of serious obstacles, too.  First, the tax generates revenue — $70 billion of it. That’s part of what pays for the health insurance law and a health insurance expansion to 34 million people. Any repeal option would have to find some way to offset those lost funds and, as this congressional session has made abundantly clear, there’s not a ton of extra cash lying around these days.

Second, this push to overturn part of the health law will have more opposition than the only repeal proposal that has succeeded. That was the repeal of a 1099 tax reporting provision, which required small businesses to file tax forms on any purchase over $600. The reporting requirement was panned as overly burdensome by everyone from President Obama to House Speaker John Boehner. After much legislative debate, it was repealed in April.

This will be different. You can expect pushback from consumer advocacy groups and health reform supporters. They’re likely to rally against this, seeing it as an insurance industry’s attempt skirt a fee that helps finance the law’s insurance expansion.

Perhaps the biggest obstacle, though, will be generating Republican enthusiasm for repeal legislation The issue puts the party in a political bind: Anything it does to “fix” or “improve” the law makes it a less menacing campaign issue for 2012. The issue has gotten much less attention on the Hill as we’ve gotten closer to campaign season.

AHIP concedes that, today, the appetite to take on repeal isn’t there. “We have to whet the appetite,” says Tuffin. “Is that appetite there today? No, but that’s because there’s not enough awareness. This is the kind of issues that lends itself to raising awareness through outreach, hopefully recreating the 1099 dynamic.”