New Year’s Day is the start of coverage for people who signed up on the exchanges — well, theoretically — but it also triggers the start of a new ObamaCare tax that insurers and experts say will increase premiums even more.
On January 1, the ObamaCare tax imposes an annual fee on health insurers, which is estimated to bring in $8 billion next year and roughly $100 billion over the next decade, making it one of the biggest under the law.
The same health insurance industry that supported ObamaCare, because they thought it would generate unprecedented profits, has been complaining about this particular ObamaCare tax for years.
In an environment that is getting more and more hostile to insurers — who are unpopular among constituencies on the left due to profits, and on the right among those who feel they sold out American markets and choice — insurers are attempting to raise support for a bill in Congress that would repeal the ObamaCare tax.
The bill is sponsored by Rep. Charles Boustany (R-LA), and has 229 co-sponsors, which is a slim to moderate majority in the House. Support for the bill is based upon the fact that the new ObamaCare tax will increase premiums on an already “un-affordable” range of options.
However, the White House says President Obama will oppose the bill or any movement to repeal the new ObamaCare tax, and for now the measure is in effect.
On Tuesday, America’s Health Insurance Plans President Karen Ignagni predicted that the ObamaCare tax will end up hitting consumers in the form of higher premiums.
“Taxing health insurance makes it more expensive and that undermines the goals of health care reform,” she said. Ignagni’s warning is echoed by the Congressional Budget Office report, which states that the costs will be passed off to the consumers, resulting in higher premiums and out-of-pocket expenses.
Some consumers, who are eligible for subsidies to offset the cost, will see their premiums rise next year adding to already higher costs associated with the Affordable Care Act, which many Republicans are now hammering as the “Un-Affordable Care Act,” in addition to ObamaCare.
For the bulk of Americans, however, who make too much to qualify for subsidies, they will see their health care costs rise dramatically. The impact hinges upon the state Americans live in, as well as the level of coverage purchased.
For many other Americans, insurance premiums were already rising, in large part due to insurance companies being required to cover high-risk patients and offer more benefits imposed by Essential Health Benefit Standards outlined in ObamaCare.
Aside from insurance premiums being increased under the law, insurers are also expected to raise rates this year and the next to offset the cost of the new ObamaCare tax, which was sold by President Obama as an insurance industry fee.
As far as the burden from the new ObamaCare tax alone, an industry-commissioned study conducted by consultant Oliver Wyman estimated that rates will rise in 2014 by up to 2.3 percent. By 2023, according to the study, insurance rates may be increasing up to 3.7 percent annually due to the new ObamaCare tax.
The Obama administration boasted an enrollment pick-up in December, and at last count, officials said more than 2 million people had signed up through the federal and state exchanges.
However, because the administration refused to release such numbers over the past few months, whether the young and healthy have enrolled in sufficient numbers is far from clear. A failure to see sufficient young and healthy enrollees will force premium increases.
Republicans on the House Energy and Commerce Committee predicted “rate shock” in 2014.
In addition to increased insurance premiums, Americans have a host of other changes to get used to, which we have assembled below:
Individual mandate: Uninsured Americans have until March 31, 2014 to get insured, because that’s the day open enrollment ends. After that date, the government will fine those who have failed to comply by purchasing insurance. All Americans are asking: How much? The annual “penalty” for 2014 is $95 per person (or $47.50 per child under 18) with up to a family maximum of $285 or 1 percent of the family’s income – whichever is greater.
Fees on insurers: Thanks to the new ObamaCare tax discussed above, the federal government will begin to impose fees on the insurance industry. Insurance companies have stated that when the ObamaCare tax is imposed, they will have little choice but to raise insurance premiums.
No limits on coverage: In 2014, insurers will be barred from imposing annual and lifetime limits on coverage.
Subsidies: In 2014, the federal government will provide tax credits and subsidies to individuals who qualify for them. The premium subsidies will be allotted to families with incomes at 133-400 percent of the federal poverty level, but many experts say they are not enough to stop insurance cost burdens from rising.
Co-payments: Employers will be required to limit the amount of co-payments and deductibles an employee will be asked to cough up for covered services to $6,350 per person, annually.
Medicaid expansion: As part of the law’s goal of getting millions more people insured, 2014 will mark a dramatic “over-expansion” of Medicaid. It will now cover people not currently eligible for Medicare under the age of 65 with incomes up to 138 percent of the federal poverty levels.
Wellness programs: This allows employers to offer workers rewards of up to 50 percent of the cost of coverage for participating in a wellness program and meeting certain health standards.
