Rep. Phil King, R-Weatherford, recently filed House Bill 2467 to stop an automatic tax increase on health care insurance in Texas triggered by the Patient Protection and Affordable Care Act (“ACA”). The Obamacare tax increases healthcare costs for hardworking Texans.
King chairs the House Select Committee on State and Federal Power and Responsibility, which monitors the actions of the federal government and their impact on state government.
King said that House Bill 2467 is needed to address a problem at the state level that is being caused by the new federal Health Insurance Provider tax created under Section 9010 of the ACA to fund Obamacare. The federal tax is based on a pre-determined amount of revenue determined to be needed annually for Obamacare. Each health care insurance provider is then taxed a percentage of the total, based on the provider’s share of the health insurance market in the prior year. The total amount of the tax in 2014 – the first year the tax was due - was $8 billion, but it will steadily escalate to $14.3 billion by 2018 and be indexed thereafter to the growth rate of health insurance premiums.
Federal law permits insurers to pass their federal tax liability on to policyholders either by separately stating a tax reimbursement amount or by raising rates, and virtually all providers are doing so. As a result, this tax has a direct impact on increasing health care costs for Texans.
“Texas taxes insurance companies based on their written premiums, but we have no way currently to exclude from their tax base the amount that these companies receive from their policy holders in payment of the federal tax,” said King. “We need this bill to make sure that we do not have tax pyramiding and do not – in effect – tax the tax. That is terrible tax policy, and it contributes to the increasing cost of health insurance.”
House Bill 2467 amends the Texas Insurance Code to create a new exclusion from the Texas premium and maintenance tax for any amount that an insurer receives in reimbursement for the federal tax mandated by Section 9010 of the ACA.