Obamacare taxes add BILLIONS to rising premiums
On top of rising premiums, Obamacare taxes are adding hundreds of dollars per year onto customers’ costs, according to new study from the American Action Forum.
Those who braved the health-care law’s exchanges will have to pay an extra $354 on average in 2014, reports the free-market D.C.-based think tank, just due to seven taxes included in Obamacare.
The vast majority of the country covered by employer-sponsored health insurance will be forced to pay a somewhat lower tab of $196 to cover the taxes. Those with self-funded employer-sponsored insurance are exempt from several of the largest culprits and will have the lowest added cost at $94 in 2014, which will drop to $59 by 2016.
One is aimed at the insurance companies, forcing them to pay the federal government for the privilege of selling health insurance — an ironic touch for a law meant to make health coverage cheaper. AAF estimates that this tax alone, which will be passed onto consumers, will cost an extra $101 in 2014; in 2015 and 2016, it’ll be increased to $143 on average as the federal government ups their funding requests every year.
In 2014, the total tax will amount to $8 billion; in 2015 and 2016, it’ll be $11.3 billion, and the current plan comes it at $14.3 billion in 2018.
A similar tax targets pharmaceutical companies, upping the cost of paying for medicine. That one piles on just $16 to existing premiums per year. This one will account for $3 billion for each of the next three years, also divided amongst pharmaceutical companies by their market share. The controversial medical device tax add $13 in 2014, $14 in 2015, and $15 in 2016.
The reinsurance fee — commonly known as bailout funding, a pool of money for insurance companies to draw from if their pool of customers on the exchanges cost more than expected to insure — raising premium prices as well. The fee gradually decreases over the next three years as the reinsurance program is scheduled to end in 2016. This year, it will cost customers an extra $63 to raise $12 billion total; in 2016 it’ll add another $26 during the tax’s final year to collect $5 billion.
There are several other costs as well. The risk adjustment fee, which will transfer funding from places with healthier customers to those paying for sicker individuals, will add $1 a year to premiums. The Patient-Centered Outcomes Research Institute fee, a tax collected per insured person, per month meant to fund medical research, will cost just $2 annually.
Exchange plans cost significantly more than those from private insurers because they’re subject to the health exchange user fee, a 3.5 percent tax placed on all premiums in the federally run Obamacare exchnage. The idea is for exchanges to eventually become self-sustaining by having exchange customers pay the administrative costs themselves.
In state-run exchanges, the tax varies But customers in states with unexpectedly low enrollment will likely face tax increases soon. Many exchanges, including California, Hawaii and Minnesota, are already worried about how they’ll raise enough funding from existing rates.
While enrollment has risen in the past several months, customers in individual states with low numbers of sign-ups may see their insurance premiums rise anyway. Hawaii’s exchange, notorious for already incurring the highest cost to insure each sign-up, has even considered taxing non-exchange insurers to pay for their Obamacare marketplace.
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