Health Care Reform Plan Excise Tax Gets Little Support From Employers

By Staff Report

Sep. 24, 2009

Few employers would support including a provision in health care reform legislation to tax insurers that provide costly health insurance plans as a way to generate revenue needed to expand access to health care coverage, according to a survey released Thursday, September 24.

The Watson Wyatt Worldwide survey of 160 employers found that just under 20 percent of respondents would support such a tax, which is part of health care reform legislation being considered by the Senate Finance Committee.

Under that measure, starting in 2013 a 40 percent excise tax would be imposed on employer-provided health insurance coverage on that portion of a premium exceeding $8,000 a year for single coverage and $21,000 for family coverage.

The threshold for triggering the tax would be set somewhat higher for employees working in certain high-risk industries, such as law enforcement and mining. The tax would be paid by insurers and third-party claims administrators in the case of self-funded plans, but experts say those parties would try to recover those extra costs from employers.

There is even less support to include the cost of employer-paid health insurance premiums as income to employees as a means to generate revenue to expand access.

Just 11 percent of respondents support such a change in tax law. There has been little congressional interest as well.

Meanwhile, 73 percent of respondents said health care costs are likely to increase either somewhat or significantly if Congress approves health care reform legislation. Sixty-eight percent said that if reform legislation is passed, it will weaken the role employers play in providing coverage, and 18 percent said the enactment of reform legislation would greatly weaken the employer role.

“Both Congress and the White House have said repeatedly that health care reform should build on the employer-sponsored system. However, most employers are apprehensive that the outcome will be quite different,” said Ted Nussbaum, director of group and health care consulting at Watson Wyatt in Stamford, Connecticut, in a statement.

A summary of the survey is available at

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail

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