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Six reasons why health insurance premiums are now unaffordable

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To understand why health insurance premiums are now costing double, or more, than they did before Obamacare became the law, we look at the new tax increases imposed on each insured.

A summary of the fees and taxes now paid or is scheduled to be paid by the insurers of all health plans:

1. Patient-Centered Outcomes Research Institute (Comparative Effectiveness) Fee: The PCORI was
authorized by the U.S. Congress to provide evidence-based research intended to help people make informed health care decisions. Insurers began paying this fee September 30, 2012. Beginning Oct. 1, 2013, the fee doubled. It will increase every year for inflation, set by the Secretary of the Treasury. The fee is $2.00 per covered member ($0.17 per member per month).

2. Annual Health Insurance Industry Fee: Insurers will be assessed an annual fee to cover the subsidies for some people buying health insurance on the exchanges. The total amount collected by the fee will be eight billion in 2014, increasing to $14.3 billion by 2018. Thereafter, the amount assessed will be determined by the increasing rates of health insurance. This fee will increase premiums by 2-2.5 percent in 2014 and 3-4 percent thereafter. The fee is permanent.

3. Transitional Reinsurance Program Assessment Fee: This fee is assessed to fund payments to individual market issuers covering high-cost individuals. Each state may establish its own reinsurance program or require supplemental reinsurance contributions. If a state does not establish its own program, the U.S. Department of Health and Human Services (HHS) will operate the reinsurance program for the state. The cost is estimated to be $63.00 per insured, plus an administrative fee. This fee will phase out after 2016.

4. Risk Adjustment Program and Fee: This fee is intended to "spread the financial risk borne by health insurance issuers in the individual and small-group markets more evenly. In turn, HHS anticipates the program will stabilize premiums and provide issuers the ability to offer a variety of plans to meet the needs of a diverse population." Coventry Health Insurer estimates that the risk adjustment fee will cost about $0.08 per member, per month, is effective in 2014 and remains permanent.

5. Marketplace or Exchange User Fees: "In proposed federal rules released in late 2012, HHS proposed a monthly user fee equal to 3.5 percent of the monthly premium for each policy in federally facilitated marketplaces. Coventry estimates the marketplace user fees in state marketplaces will be similar."

6. Cadillac Excise Tax: This tax is for high-cost insurance plans. It is thought that the Cadillac tax, will be an incentive to health plans to control the cost of health insurance. If a plan’s annual premiums for single coverage exceed $10,200, the dollar amount over that threshold will be taxed at a 40 percent rate.

When health insurers are forced by law to pay these fees and taxes, these added costs will be shared by individuals and families who purchase insurance. Some things sound wonderful in theory, but the cost of implementing them is too great to be feasible. Obamacare is one these things.

The Affordable Care Act is causing families to feel panicked. There are so many facts floating around and people are becoming stressed over the rise in health insurance that has already hit millions. Will it get better as time passes? The process might, but health insurance plans will only continue to increase.



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