Insurers criticize health law tax
Taxes aimed at generating money for the Patient Protection and Affordable Care act will hit families harder than they will individuals when the taxes go into effect next year, according to an analysis by an industry organization, America’s Health Insurance Plans.
A qualified health plan will charge about a half-percentage point more for family coverage in the individual and small-group markets than it will for individual coverage, according to an analysis by the group.
The premium tax amounts to “a sales tax that undermines the goal of getting people into the health care system,” said Robert Zirkelbach, vice president of communications for America’s Health Insurance Plans. “We believe the tax should be repealed.”
Measures to do that, sponsored by U.S. Rep. Jim Matheson, D-Utah, and Sen. Orrin Hatch, R-Utah, are pending in Congress. The measures are H.R. 763, S.603, respectively.
The analysis says that the premium tax, which is a fixed amount, combined with other taxes and contributions, drives the cost of insurance up 6.5 percent for a single person in the individual market, 7.2 percent for a family.
In the small-group market, taxes on an individual buyer would amount to 6.2 percent and 6.7 percent for a family of four.
The organization used Congressional Budget Office figures that estimated the annual individual-market premiums for single purchasers at $5,238 and $12,857 for families. In the small-group market, premiums would be $7,143 and $17,143 for individuals and families respectively.
In cash terms, the premium tax would the $110 for a single buyer in the individual market and $270 for a family. In the small-group market, individuals would be charged $150 and families $360 in premium taxes.
Families USA, which supports the Affordable Care Act, says that nearly 26 million Americans will be eligible for premium tax credits that will help them pay for health coverage.
All those people will be charged the premium tax, however, Zirkelbach said.
In its first year, the premium tax is expected to generate $8 billion, most of which will be borne by individual and small-group customers because large, self-funded employers will pay no such tax, Zirkelbach said.
Over the first 10 years of full effectiveness, the premium tax is expected to exceed $100 billion, according to America’s Health Insurance Plans, citing the Joint Committee on Taxation.
AHIP factored into its analysis proposed fees, such as a user’s fee for customers in the federal health-insurance exchange. Colorado will have its own exchange and fees.
The Colorado exchange, known as Connect for Colorado, is preparing to set up a market for health insurance that will open on Oct. 1 and begin charging customers on Jan. 1.
The fees also include reinsurance contributions of $63 per individual and $252 per family in both markets.
That money is to be used to offset unanticipated costs, Zirkelbach said, because, “There’s a lot of uncertainty about who will purchase coverage” and the fund will limit fluctuations in premiums.