Wednesday, November 12, 2014

Obamacare's House of Cards

Did you know almost 25% of individual health insurance premiums paid for exchange plans go directly to taxes and fees? Did you know that you, as taxpayers, are funding 76% of the total premiums? While some call American voters stupid, the reality is consumers are simply uninformed about the Unaffordable Care Act.

While the law passed in 2010, taxpayers are now learning about the complete lack of transparency coupled with misdirection and layers of bureaucracy created in Obamacare. This is because during the first four years all of the warm and fuzzy benefits were implemented. These provisions were popular because they were perceived as expanding coverage for no cost. In fact the major cost provisions didn't start until this year. Here is the breakdown of what it costs taxpayers.

According to HHS Secretary Burwell through mid-October enrollment was at 7.1 million people. According to HHS, in June the average premium was $346 per month. Taxpayer subsidies pay $264 of the premium while the consumer pays the remaining $82.
  • Taxpayer subsidies ($264 per enrolled)         $1,874,400,000
  • Consumer payments ($82 per enrolled)            $582,200,000
  • Total Premiums ($346 per enrolled)              $2,456,600,000

There are numerous taxes and fees such as the medical devices tax, the Boehner tax (tanning beds), and the hospital tax which consumers don't see. These started in the first four years of Obamacare and are indirectly impacting your premiums. However, the new taxes and fees starting in 2014 have a direct impact on premiums. These are measurable and have a direct impact on what you pay in premiums. Here is the breakdown of four taxes/fees and what they cost based on the enrollment figures from above:
  • PCORI Fees ($2 PEPY)                                         $14,200,000
  • Reinsurance Fees ($63 PEPY)                           $447,300,000
  • Exchange User Fees (3.5% of premium)            $85,981,000
  • Health Insurance Tax (2.4% of premium)         $58,958,400
  • Total premiums paid to the government:        $606,439,400
[PEPY = Per Enrollee Per Year]

It's not rocket science to see that the government is taking in more than consumers are paying. It should also be eye opening to know that the government is taking in more of your premiums than insurance companies are retaining for administrative costs.

The next time supporters of the law claim big bad insurance companies are raking in huge profits it would be good to remember that if we really wanted lower premiums the best way to do it is remove government bureaucracy from the equation.
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