President Obama’s health care overhaul contains a tax that will drive up premiums for individuals, families, and even Medicare Advantage beneficiaries, according to a new study released by America’s Health Insurance Plans (AHIP).
Obamacare “imposes a new sales tax on health insurance that starts at $8 billion in 2014, increase to $14.3 billion in 2018, and will continue to increase each year,” AHIP explains to introduce the study on the Health Insurance Tax (HIT). Although the government taxes the health insurance providers, the Congressional Budget Office acknowledged in 2009 that the cost “would be passed on to purchasers and would ultimately raise insurance premiums by a corresponding amount.”
The AHIP study predicts that, on average, individuals buying insurance outside a company policy will pay an extra $2,171 over 10 years, or $5,140 over ten years if they buy a family plan. Employees at small businesses that do not self-insure will see their premiums rise $2,794 for individual plans and $6,883 for family policies. If you work for a large company your premiums will rise $2,636 for an individual policy, compared to $7,186 for a family policy.
AHIP expects Medicare Advantage premiums to rise by $3,604 over ten years. Why? “[F]or each dollar paid in taxes, an additional $1.54 in premiums must be collected,” the study suggests.
The actual premium increase varies by state. “In general, states that have a higher proportion of their population in self-insured plans will pay a smaller proportion of the taxes,” AHIP explains. New Yorkers who buy family policies in the individual market will see their premiums rise $9,942 over ten years, for instance. The study predicts an average increase of $9,221 for West Virginians who work at small businesses.
A group of stakeholders have formed a Stop the HIT coalition calling for the repeal of the Health Insurance Tax
“For the millions of small businesses and their employees across the country, the financial burden added by the HIT will be too much to bear,” said Amanda Austin, Director of Federal Public Policy at the National Federation of Independent Business (NFIB), a leading Stop the HIT Coalition Member. “Washington needs to understand that taxing small businesses, the nation’s number one job creator, has a direct consequence – higher costs.”