A bill that adds a 2.5 percent tax on health insurance premiums in New Jersey is headed for Gov. Phil Murphy’s desk.
The bill passed after a heated debate between Republicans and the bill’s sponsor, Assemblyman John McKeon, D-Essex/Morris, who said the bill was needed to protect New Jerseyans if the Affordable Care Act is rescinded by Congress.
The money collected from the tax will create a $300 million “Health Insurance Affordability Fund” which will be allocated to New Jersey’s state-based exchange.
“As the Trump administration has worked to dismantle the ACA, in New Jersey we moved to mirror what was available to people at the federal level, largely implementing it within our own state-based exchange,” McKeon said in a statement. “By replacing what stood at the federal level, this legislation simply serves as a state level continuation of a soon-to-expire assessment that insurers were already paying.”
Assemblyman Hal Wirths, R-Sussex, said the bill was a “devastating” move for working middle class families who will “be paying the bill.” Republicans estimate the bill will add $600 in health insurance costs to families.
“We are punishing the people who are doing things right,” Wirths said
A similar federal tax was rescinded by Congress with bipartisan support, he added.
“If they think it’s wrong on a federal level, how can it be right to increase taxes during the worst time?” Wirths said.
The New Jersey Business & Industry Association was similarly opposed to the bill, saying it “represents yet another cost to business at the worst possible time.”
“Raising taxes does not make healthcare more affordable,” the NJBIA said in a statement. “It’s unfortunate that our policymakers continue to seek ways to inflict financial pain on New Jersey employers as they struggle during these unprecedented challenges.”
The bill has Murphy’s support, and he held a roundtable discussion with state administrators and lawmakers on the topic last week.
Assuming it is indeed signed, it will take effect Jan. 1, 2021.