BEYOND THE NUMBERS
The House is expected to vote on a bill this week that would weaken the requirement that employers offer health insurance, raising the number of uninsured and adding $58 billion to deficits over the next ten years.
The bill would:
- Retroactively forgive the penalty on employers that don’t offer health coverage. Under the Affordable Care Act (ACA), employers with more than 50 full-time equivalent workers must offer affordable, comprehensive coverage to their workers and their dependents or pay a penalty. Implemented in 2015 after a five-year ramp-up, the penalty is triggered when a full-time employee receives a premium tax credit for enrolling in marketplace coverage but isn’t assessed until employers have a chance to review (and contest) the IRS determination that they owe a penalty. The bill would place a retroactive moratorium on penalties from 2015 to 2018, creating a $26 billion giveaway for employers that shirked the rules.
- Delay the “Cadillac tax.” The excise tax on high-cost health plans (“Cadillac tax”) is designed to slow health care cost growth by discouraging firms from offering extremely expensive health coverage that promotes excess use and inefficient delivery of health care. It’s a 40 percent excise tax on a plan’s value over a certain threshold, starting in 2020. Although the tax would initially apply to only a small share of premium dollars, it would significantly reduce national health spending in the long run and raise wages, the Congressional Budget Office (CBO) projects.
The tax was originally scheduled to take effect in 2018, but the December 2015 bipartisan tax deal delayed it by two years, and this bill would delay it for one more at a cost of $15.5 billion. Rather than delay or repeal the Cadillac tax, as we’ve written, policymakers should either modify it to address various concerns (as the Obama Administration proposed) or replace it with a similar measure to achieve cost-containment goals, such as a well-designed cap on the tax exclusion for employer-based health coverage (as several Republican analysts have suggested).
- Let employers satisfy the mandate even if they don’t offer coverage to employees who work 30-39 hours per week. The bill would change the definition of full-time work under the employer mandate from 30 hours per week to 40, ostensibly to keep employers from shaving workers’ hours to bring them below the threshold and evade the requirement. Contrary to early speculation, there’s no evidence that the ACA has caused a shift to part-time work. In fact, it’s this House bill that threatens full-time work since, as CBO has pointed out, many more workers work 40 hours per week than 30, so such a proposal “could lead employers to make changes that would affect many more workers than will be affected under current law.” The result would be fewer people with employer-sponsored insurance, more people seeking subsidized coverage, and more people uninsured.
- Let employers stop sending the tax forms that some workers need to prove their eligibility for the premium tax credit. The bill would let employers stop routinely sending to their employees Form 1095-C, which indicates whether an employer made an offer of minimum essential coverage to the employee and her family and whether it was affordable. People who use premium subsidies to afford marketplace plans may need this information to support their claim for the credit on their tax return but, under the bill, taxpayers would need to make written requests to employers for the information — a highly unusual process for getting important tax information — and wait up to 60 days for a response, running the risk that the taxpayer would file late.
Insurance offer disclosures also help other people who may not know to request this information. For example, an employee may believe he is ineligible for a premium tax credit and locked into the employer’s plan until he receives this form that says otherwise, influencing his choices in the next coverage year.
- Repeal a tax designed to reduce skin cancer by discouraging indoor tanning. The ACA placed a 10 percent, consumer-paid excise tax on indoor tanning services, which dermatologists say account for nearly 400,000 cases of skin cancer each year and the Centers for Disease Control and Prevention labels as unsafe. The tax is having its desired effect, contributing to the roughly two-thirds reduction in the percentage of high school students using indoor tanning services between 2009 and 2017. The bill would lift the excise tax, despite evidence of a cost-saving public health intervention.