A proposed 40% excise tax on “Cadillac health plans” could cost employers about $46 billion per year by 2019, and health insurers could be paying $6.1 billion in federal “annual fees” in 2019.
Senate Finance Committee Chairman Max Baucus, D-Mont., sent the bill to the Congressional Budget Office and the JCT Friday, and CBO analysts published their “score” of the bill Wednesday. The CBO analysts said implementing the bill precisely as written would lead to a total of $829 billion in new spending from 2010 to 2019 but, thanks to a variety of cost-cutting and revenue-raising provisions, would cut the federal budget deficit by $81 billion over that period.
The JCT now has provided more detailed estimates of the effects of the AHFA bill draft on some types of products and tax breaks of interest to insurers.
The JCT is a nonpartisan congressional committee that advises Congress on tax legislation.
All revenue provisions in the AHFA bill draft combined could raise about $11 billion in revenue in 2010 and about $13 billion in 2011, and that total would increase to about $104 billion in 2019, JCT analysts predict.
The provisions could raise about $381 billion from 2010 to 2019, the analysts report.
The AHFA bill draft would impose a 40% excise tax on individual health coverage with a value greater than $8,000 and family coverage with a value greater than $21,000 starting in 2013. The excise tax revenue would start at $9.5 billion in 2013 and total $201 billion from 2013 to 2019, the JCT analysts estimate.
The AHFA bill also would require health insurers to pay annual fees. The fee would start at $5.5 billion in 2010, increase to $6.1 billion per year in 2011, then hold steady at $6.1 billion per year. That provision could raise about $60 billion over the 10-year period analyzed, the JCT analysts say.
Other JCT analyst forecasts:
- Capping health flexible spending account contributions at $2,500 per year could raise $600 million in 2011, with revenue increasing to $1.9 billion in 2019, for a total of $15 billion in revenue raised from 2011 to 2019.
- Conforming “the definition of medical expenses for health flexible spending arrangements to the definition of the itemized deduction for medical expenses (excluding over-the-counter medicines prescribed by a physician)” would raise $5.4 billion from 2010 to 2019.
- Increasing the penalty for nonqualified health savings account distributions to 20% would raise $1.3 billion from 2013 to 2019.
- Capping the deductibility of health insurer compensation at $500,000 per year might raise about $100 million per year starting in 2013, and a total of $600 million from 2013 to 2019.