January 2014: Get ready for the Obamacare health insurance tax
It’s called the Affordable Care Act (ACA), but starting in January 2014, the law’s moniker might ring hollow for many Idaho families and small businesses.
While much of the nation’s ever-jittery attention focuses on the recently announced delay of the large employer mandate in the ACA, otherwise known as Obamacare, small businesses still must deal with a part of the law that will come calling on Jan. 1, 2014: the health insurance tax.
The tax is just one of many written into the health care measure, but many across the country see this levy as perhaps the most daunting.
In short, it’s something of a sales tax on insurance plans sold by health carriers and it packs a mighty punch. Officials estimate the tax will generate $8 billion in revenue in 2014, a figure expected to jump to $14.3 billion in 2018. The hefty levy is expected to capture $100 billion through the next decade.
Business groups, including the National Federation of Independent Business (NFIB), say that because large firms often self-insure workers, small businesses will pay an unequal share of the tax.
“It’s is one of the more onerous taxes,” said Suzie Budge, head of the NFIB’s Idaho branch.
While Obamacare proponents might see the tax as an avenue to squeeze insurance companies for more and more cash, people like Budge offer a real economic forecast: She says the tax will be “100 percent pass-through,” meaning higher health care expenditures for individuals, families and small businesses.
“It’s going to add costs, and it will mean a significant increase in premiums,” Budge said, adding that the health care law in general, combined with other factors, is stifling small business growth and confidence.
It’s not that no one saw this coming. Before the controversial law passed Congress, the Congressional Budget Office noted in a November 2009 report that the cost of the tax “would be largely passed through to consumers in the form of higher premiums for private coverage.”
How bad will it be? American Health Insurance Plans, an interest group representing health carriers, recently released projections outlining what the group thinks the tax will do to the economy and the outlook isn’t pretty.
Nationwide, AHIP predicts the tax will cost 146,000 to 262,000 jobs between now and 2022, and could reduce potential sales between $19 billion and $35 billion.
Closer to home, Idahoans will see increased health costs. An individual who obtains coverage through a small employer should expect to pay an additional $2,600 for health insurance during the next decade. Families who go through small employers, AHIP says, will likely need to pay at least an additional $5,700 through the same time frame.
The numbers sound awful for Idahoans, but the situation could be worse. A New York family obtaining coverage through a small employer should expect to pay an additional $9,000 in health premiums during the next 10 years due to the tax.
Idaho’s federal delegation isn’t silent on this issue. Congressmen Raul Labrador and Mike Simpson, both Republicans, have signed on to a House bill to repeal the tax, which provides a massive funding share for the workings of Obamacare.
The House bill, formally H.R. 763, has 223 co-sponsors in the House, more than enough to secure passage. Utah Rep. Jim Matheson, a Democrat, signed on to the measure, giving the bill bipartisan credentials.
If the measure passes the House, it’s likely dead-on-arrival in the Democrat-controlled U.S. Senate.
Two GOP senators, Utah’s Orrin Hatch and Wyoming’s John Barrasson, introduced a companion bill in the Senate. Idaho Republican Sens. Jim Risch and Mike Crapo signed on to that bill, which has 24 sponsors in the Senate.
Senate leadership referred the bill to the Senate Committee on Finance. Montana Democrat Max Baucus, a chief architect of Obamacare, chairs that committee.