Welcome to 2014, the first year of the Affordable Care Act and the first year that new taxes start hitting. Politico.com has a pretty long article listing them. Here’s one example:
This year, insurers will collectively pay an $8 billion health insurance tax known as HIT, a fee that will vary based on a company’s market share. Annual collections will increase to $14.3 billion by 2018, and more than $100 billion will be brought in over the next decade.
The million-dollar question is how much of this cost insurers will pass on to consumers.
Insurers have been sounding the alarm that the tax will lead to an increase in premiums, but the law’s supporters argue the industry is just trying to protect profits and build support for repealing the tax.
Insurers point to a study done by international consulting firm Oliver Wyman a few years ago that found the tax would increase premiums by more than $2,800 per person and $6,800 per family over a decade. The study was paid for by the industry’s leading trade group, America’s Health Insurance Plans, which is lobbying hard to get the tax repealed.
Obamacare supporters say those warning of higher premiums because of the tax on insurers and other levies are crying wolf.
Topher Spiro, of the left-leaning Center for American Progress, said these taxes could easily be “offset by additional revenue that the health insurance industry will get over the coming years” because of the law’s requirement that most people get insurance.
But some independent analysts said that while insurers are most likely inflating the impact the tax will have on premiums, consumers can expect to bear some of the cost.
“Typically, the costs of a tax are split between the seller and the buyer,” said Bob Williams, a fellow at the center-left Tax Policy Center and a former deputy assistant director for tax analysis at the Congressional Budget Office.
Costs are split between seller and the buyer? Do these people understand the meaning of the word “business expense”? If people are going to set a price, they are going to do so because they are motivated by the desire to make a return. They are going to want a return that is sufficient enough to make them want to be in the insurance business in the first place. Obamacare is not going to significantly change that. So these insurance companies are going to set rates that cover the expense of the tacks. The consumers are going to bear one hundred percent of the cost of the tax—that’s just common sense.
The only thing that makes providers offer lower prices is competition with other providers. But Obamacare moves us toward insurance monopolies. So the Affordable Care Act makes it easier to pass on costs to consumers.