Congressional Budget Office (CBO) analysts are assuming that health insurance provider excise taxes created by the Patient Protection and Affordable Care Act (PPACA) will be a good moneymaker for the U.S. Treasury over the next decade.
PPACA drafters created the health insurer tax based partly on the assumption that health insurers would get extra revenue because of a PPACA mandate that requires many people to have a minimum level of coverage or pay a penalty, and another PPACA mandate that requires many employers to offer a minimum level of coverage or pay a penalty.
CBO officials updated their budget projections Wednesday. A table accompanying the update report shows the latest government excise tax revenue projections, which are similar to but slightly more detailed than excise tax projections released in April.
The table shows revenue from the new PPACA tax on health insurers starting at $6.8 billion in 2014 and generating $10 billion to about $18 billion in revenue per year over the next decade. If the tax takes effect on schedule and works as the CBO analysts expect, it could produce a total of $145 billion in revenue from 2015 through 2024, or about 13.5 percent of the $1.1 trillion in projected total excise tax revenue over that period.
Tobacco excise taxes could generate a similar amount of revenue, or about 13.4 percent of total excise tax revenue. Aviation excise taxes could account for about 16 percent of the total, and alcohol about 10.1 percent. The biggest source of excise tax revenue, highway-related taxes, could produce $378 billion in revenue, or 35 percent of the 10-year total.
Correction: In an earlier version of this story, we described the time period included in the CBO projections incorrectly. The time period extends from 2015 through 2024. The share of excise tax revenue coming from alcohol was also described incorrectly. The share is 10.1 percent.