Budget deal gives health insurers respite from 'premium tax'

Health insurers nabbed a victory in the $1 trillion spending bill unveiled late Tuesday night, earning a one-year freeze on the so-called premium tax.

The tax has been strongly opposed by insurance companies and business groups, who argue that the cost of the tax is passed on to workers in the form of higher premiums.

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“It isn’t ideal, but it’s certainly a positive step,” Amanda Austin, Vice President of Public Policy at the National Federation of Independent Business, wrote in a statement Wednesday.

She said the bill would give businesses “a brief period of relief,” but that lawmakers must continue to fight for a full repeal.

The tax has also been opposed by groups representing Medicaid health plans, who have argued that the government is essentially "taxing itself" with the provision. It was expected to cost state Medicaid programs $14 billion over 10 years. 

“Including a one-year delay of the annual excise tax on health insurers for calendar year 2017 in this bipartisan legislation shows the widespread opposition to this nonsensical policy," Jeff Myers, president and CEO of Medicaid Health Plans of America, wrote in a statement Wednesday.

The health insurance tax, or HIT, is among two other ObamaCare taxes that would also be frozen under the budget package. Negotiators also agreed to pause the “Cadillac tax" on high-benefit health plans, a priority for Democratic leaders, and the medical device tax, which has been largely pushed by Republicans.

The premium tax, which was projected to bring in more than $100 billion over 10 years, was expected to be delayed at least a year, The Hill reported earlier this week.

Republicans have long been in favor of repealing the premium tax, and a growing number of Democrats have also signed on. A bill in the House to abolish the tax has the backing of 228 Republicans and seven Democrats.