With the re-election of President Obama and the U.S. Supreme Court upholding the constitutionality of the Patient Protection and Affordable Care Act, policy makers face important choices that will significantly impact the cost and benefits of health care for every American. One monumental challenge we currently face is that unless Congress acts, a little-known tax will kick in next year that will cost Americans billions of dollars and hundreds of thousands of jobs –delivering a devastating blow to an already weakened economy.
The Health Insurance Tax — an integral part of the health care reform law — will force businesses to cut up to 250,000 jobs over the next eight years, as they struggle to meet the added cost of insuring their employees. America’s small businesses, which have suffered tremendous losses during the currently crippled economy, will be especially hard hit by having to make about 59 percent of those cuts.
In theory, the tax would be imposed on health insurance companies and is supposed to raise at least $87 billion by 2020. But in reality, this tax will be passed on to employers and consumers, leaving patients to face health insurance premium hikes and encouraging states to return to the ineffective, fee-for-service models they have found lacking in delivering sufficient and quality health care to their residents in the past. According to a congressional study, premium costs are projected to increase around $2,800 for individuals and $6,800 for families over the next 10 years.
Instead of delivering reduced costs, improved healthcare quality and greater consumer access to care like it promised, the Health Insurance Tax will further burden America’s most vulnerable populations by increasing costs on the elderly and patients who are dependent on Medicare and Medicaid for their healthcare coverage. Medicare Advantage and Part D prescription drug plans will be hit with $34 billion of that tax, which will undoubtedly result in reduced benefits to keep plans affordable, or an increase in premiums as the per-beneficiary cost of coverage increases by more than $3,500 over the next 10 years.
In Florida alone, the average impact of the Health Insurance Tax on Medicare Advantage beneficiaries is estimated to be more than $4,000. The cost of Medicaid managed care will also increase, putting an additional strain of at least $23 billion on the federal government and up to $15 billion on state governments. The overall impact of the Health Insurance Tax on Florida is estimated to be between $8.48 and $8.57 billion by 2023, making our state one of the top 10 most impacted states in the nation.
To cut through the noise surrounding the Health Insurance Tax, the brutal reality is that the tax will increase costs for employers, consumers and government, as well as reduce healthcare choices and undermine all the benefits that healthcare reform was intended to bring. Congress should exert its power in defense of America’s employers and patients and repeal this tax before it exerts its devastating effect on our healthcare system and economy.
Thomas C. Feeney, III, president and chief executive officer, Associated Industries of Florida