Supporters ofthe tax reason that it's a sensible means of raising revenue tosupport the health system that the same insurers are using togenerate profits. (Photo: Shutterstock)

A fee on health plans that Congress voted last year to suspendwill cost the insurance industry $15.5 billion if it goes back intoeffect next year, according to an IRS analysis.

The Health Insurance Provider's Fee was included in theAffordable Care Act to fund setting up state and federal ACA marketplaces. The fee is based on aninsurer's share of the market, which is calculated based on eachinsurer's net premiums for the year.

Congress has had a fraught relationship with the tax, suspendingit in 2017, allowing it to go back into effect in 2018 and thensuspending it again in 2019. Unless Congress acts, it will go intoeffect again next year.

Related: Maryland seeks to tax insurers to protect ACAmarket

Supporters of the tax reason that it's a sensible means ofraising revenue to support the health system that the same insurersare using to generate profits.

Unsurprisingly, insurers are vehemently opposed to the tax.AHIP, the top insurance lobby group, warns consumers the tax willincrease premiums by $7,000 over the next decade for familiesgetting coverage from small employers.

"The health insurance tax is a $100 billion+ sales tax on healthinsurance that hits nearly everyone, increasing the cost of healthcoverage for individuals, small businesses, seniors, states, andtaxpayers," says AHIP on its website. "AHIP will continue to pushfor a full repeal of the health insurance tax because it makeshealth care less affordable for the very people who need the mosthelp affording health care."

Similarly, UnitedHealth commissioned an analysis by Oliver Wymanthat concluded the tax would result in a 2 percent increase inpremiums for policyholders.

While analysts expect health plans to pass the cost of taxesonto consumers, supporters of the tax hope that a competitivemarketplace will force insurers to cut into profits, rather thanraise premiums.

Earlier this year, S&P analyst Deep Banerjee told ModernHealthcare that competition was so fierce in the Medicare Advantagemarket that insurers will be reluctant to raise premiums, even ifit means reduced profits.

Read more: 

• Insurers returning to pre-ACAprofitability
• Is the end finally near for the ACA's Cadillactax?
• Spurned by budget bill, insurers look to higherpremiums