If states act quickly, they can significantly lower residents’ health insurance costs by claiming revenue the federal government is about to abandon. In December 2019, Congress ended the federal government’s health insurance assessment (HIA), effective January 1, 2021. If states pass legislation in 2020, they can create replacement assessments on insurance companies that capture $14 billion a year without raising insurers’ payments above current levels. (Table 1).
One important difference between a state HIA and the expiring federal HIA involves the use of assessment dollars. Originally applied to prevent the Affordable Care Act (ACA) from increasing the federal budget deficit, the federal HIA now funds the national government’s general operations. It is not targeted to any specific use. By contrast, a state can direct its HIA revenue to lower families’ health costs in ways that benefit not just consumers but also insurers and even small employers.
The ideal structure of health insurance assessments will vary from state to state, but all states face one common truth: If they do not act in 2020, they will lose out on a significant potential revenue stream that is now available without raising assessments on insurers. States that seize this current opportunity could benefit for years to come, leveraging revenue to greatly lower health care costs for struggling families.
03.03.2020 / Webinar