The Affordable Care Act (ACA) provided access to health insurance coverage for tens of millions of uninsured Americans and broke the ideological logjam that stymied major health reform for decades. But more than a decade after its passage, it has become apparent that some of its specific components need reform.
The Middle Class Health Benefits Tax Repeal Act of 2019 (HR 748) would repeal an excise tax, that was part of the ACA, on expensive employer-provided health insurance plans. Since the ACA passed, health care costs have decelerated dramatically (while the excise tax has yet to take effect) and the fiscal position of the federal government has strengthened enormously. This means that the revenue gained from the excise tax is not a short-term necessity, and the tax should be largely judged on its policy virtues as a cost-containment device. On these grounds, it largely fails, as it represents a fundamental strategic error in addressing rising health care costs. To put it simply, the tax aims to reduce patients’ utilization of health care. But the glaring problem of U.S. health costs is not excess utilization; instead it is high and rising prices for health care. Smart cost containment policy should address these prices, not seek to ratchet down how much care patients seek.
Congress should pass HR 748 and move on to health reform that more-precisely targets the roots of rising costs—excess market power in health provider and insurance markets. Such a reorientation of policy will make the ACA stronger, not weaker.