If health care affordability is our goal, adding a new tax on health insurance seems like a bad idea.
Yet that’s what consumers are paying right now, with a big increase in the tax on the way next year.
A number of new taxes were enacted under the health reform law. And non-partisan analyses have consistently shown that these taxes raise the cost of health insurance premiums.
The largest of these taxes, the health insurance tax, began at $8 billion this year and will increase by 41% to $11.3 billion in 2015. In total, this tax will add up to over $100 billion over the next ten years, resulting in higher premiums. The nonpartisan Congressional Budget Office has said that the new health insurance tax will be “largely passed through to consumers in the form of higher premiums.” According to an analysis by the actuarial firm Oliver Wyman, this total impact of the tax will mean that an individual purchasing coverage on his or her own for 2015 will pay $170 in higher premiums and small businesses will pay an additional $530 for each family they cover. Congress’ bipartisan Joint Committee on Taxation estimates that the tax will add an additional $350-$400 a year to family premiums in 2016.
The law also includes taxes on medical drugs and devices, fees associated with reinsurance, and funding research on the effectiveness of medical treatments. Fees associated with running the health insurance exchanges are expected to add 3.5 percent to premiums in states with a federally run exchange.
For more on the taxes and fees in the health reform law, visit Time for Affordability.