Nonpartisan Analysis Shows Proposed Excise Tax On Health Care Benefits Will Burden Families, Individuals

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Nonpartisan Analysis Shows Proposed Excise Tax On Health Care Benefits Will Burden Families, Individuals

Responding to a request by Connecticut Congressman Joe Courtney, the nonpartisan Joint Committee on Taxation (JCT) analyzed the impact of the Senate Finance Committee's proposed 40 percent excise tax on high-cost health care benefits on families and individuals, a proposal which Courtney has led the opposition to in the House of Representatives.

"Generally, we expect the insurer to pass along the cost of the excise tax to consumers by increasing the price of health coverage," states the review by the nonpartisan JCT.

"The JCT analysis confirms what has been obvious since the unveiling of this ill-advised excise tax on health benefits, which is that a tax on insurers of high-cost plans is without question a tax hike on working families, businesses, and individuals," stated Courtney.

Click here to download JCT analysis of Senate proposed tax on benefits.

The review of the excise tax proposal by the JCT shows (click here for charts/graphs):

* The total number of individual and family plans impacted by the excise tax grows from 19% to 30% and 14% and 31% respectively between 2013 and 2019.
* The total number of family plans affected by the excise tax grows from 12.7 million to 31 million between 2013 and 2019.
* The average tax increase for all households grows from $918 to $1,318 between 2013 and 2019.
* For the middleclass income brackets, the number of households hit by the tax doubles, and in some income brackets nearly triples, by 2019.

One major concern of Representative Courtney's outlined by the JCT is that "consumers will seek less costly policies that would reduce their exposure to the excise tax. Cost reductions could be achieved through several strategies, ranging from managed care plans and limited provider networks to more out-of-pocket cost sharing by the consumers." The analysis continues, "When employers offer employees less costly plans, the employees will have less compensation in the form of non-taxable health care benefits and more in the form of cash compensation." The result, according to the JCT is that, "the insurance consumer indirectly pays the tax as taxable income increases with the increased cash compensation."

Congressman Courtney spearheaded a letter to Speaker Nancy Pelosi urging the House leader to reject the Senate tax proposal. The letter has been signed by 180 Democrats, more than 70 percent of the House Democratic Caucus. (Full list of cosigners available upon request)

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