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Obamacare’s Health Insurance Tax Costs American Jobs

May 8, 2014

President Obama’s health care law imposes more than $1 trillion in new taxes on employers, manufacturers, and middle class families. According to the Joint Committee on Taxation, the law violates the President’s pledge not to raise taxes on families making less than $250,000 per year.

For example, section 9010 of the health care law imposes a tax on health insurance providers starting in 2014, based on net premiums in the fully insured market. The aggregate tax in 2014 is $8 billion. It climbs to $11.3 billion in 2015 and 2016, reaches $14.3 billion in 2018, and after that grows by premium inflation. Supporters of the law argue insurance companies will simply absorb the tax. Independent experts tell a different story.

  • This week, the NFIB Research Foundation released a study estimating that Obamacare’s health insurance tax will cost between 152,000 and 286,000 private sector jobs by 2023. The study predicts 57 percent of those job losses will be borne by small businesses. According to the NFIB, these job losses will reduce U.S. real output (sales) between $20 billion and $33 billion by 2023.
  • NFIB used data from a March 2011 study conducted by former Congressional Budget Office Director Doug Holtz-Eakin showing that the health insurance tax will raise premiums by as much as three percent – or nearly $5,000 per family over a decade. The NFIB projections also included a key June 2011 JCT estimate measuring the tax’s premium increase at 2.5 percent.
  • The same June 2011 JCT analysis predicted Obamacare’s health insurance tax would be borne by: 1) consumers in the form of higher prices; 2) owners of firms in the form of lower profits; 3) employees of firms in the form of lower wages; or 4) other suppliers to firms in the form of lower payments.
  •  The JCT analysis also forecast that eliminating the health insurance tax “could decrease the average family premium in 2016 by $350 to $400.”
  • Actuarial firm Oliver Wyman produced an October 2011 report calculating that the health insurance tax “will increase premiums in the insured market on average by 1.9% to 2.3% in 2014.” The report went on to say that by 2023 the health insurance tax “will increase premiums 2.8% to 3.7%.”
  • Oliver Wyman released a separate report in November 2012 showing the health insurance tax’s state-by-state cost impact on individual consumers, employers, Medicare Advantage patients, and state Medicaid managed-care programs. It concluded, “for each dollar paid in taxes, an additional $1.54 in premium must be collected.” Over 10 years, the taxes are expected to add an average across all states of $5,140 for family plans in the individual market, $6,883 for family plans in the small-group market, and $7,186 for family plans in the large-group market.
  • On February 20, 2014, the American Action Forum released a research paper calculating how much the average insured person will pay due to Obamacare’s health insurance tax. The report says the tax would “result in a premium increase of $60 to $160 per person in 2014, rising to $100-$300 by 2018, for the average insured individual – and over $260 per family in 2014, rising to over $450 in 2018, for families with employer-sponsored, fully-insured coverage.” This will only increase over time as the Obamacare health insurance tax grows.

Health Care Headlines

National Journal:‘Conga Line of Problems’ Awaits Burwell at HHS” There’s already a mountain of problems waiting for Sylvia Mathews Burwell at HHS. And that mountain will probably grow even bigger by the time she’s confirmed.

Las Vegas Review-Journal: “Own a small business? Brace for Obamacare pain” Local business owners might be hoping the Affordable Care Act’s insurance mandates cover sticker shock. The law’s employer coverage mandate doesn’t take effect until 2015, but early plan renewals are starting to roll in. And for some businesses, the premium jumps are positively painful.

Washington Post: “Poll: Obamacare hits new low” A new poll shows the public’s opposition to Obamacare has never been higher. The Pew Research Center poll shows disapproval of the law hitting a new high of 55 percent. It comes on the heels of several polls last week that showed the law had very little -- if any -- bump after sign-ups on the health-care exchanges exceeded goals.

The Hill: “Reports: FBI looking into Oregon’s O-Care rollout” The FBI is investigating the botched rollout of Oregon’s health insurance marketplace, according to multiple reports. Cover Oregon is considered one of the worst-functioning systems created under Obamacare. State officials are currently in the process of transferring mana