Alabama Blue Cross Shares Obamacare Tax Woes With Customers
Insurance companies aren't crazy about their share of the health law's taxes, but mostly they've complained to politicians and regulators.
At least one health plan wants to bring consumers into the loop.
"Affordable Care Act Fees and Taxes" is a separate line on bills Blue Cross Blue Shield of Alabama is sending to individual customers.
The tax amount is $23.14 a month, or $277.68 annually, on a statement one subscriber shared with Kaiser Health News. That's added to the "Current Amount Due for Benefits" of $322.26, for a total monthly premium of $345.40 for one person.
Taxes have been part of health plan costs for decades. Economic theory says business taxes are often borne by consumers in the form of higher prices.
But insurers haven't typically published taxes on their invoices, says Mark Hall, a law professor at Wake Forest University.
"One thing that bothers me is attributing any amount specifically to the 'Affordable Care Act,' " he said via email. "There are also state premium taxes, and normal corporate and sales taxes, none of which are itemized the same way."
He also questioned whether Alabama Blue Cross would have been able to calculate the amount so precisely.
Obamacare backers say the taxes are critical to the health law, which stands to bring insurers billions in new premium revenue. They point out that federal subsidies will help many consumers pay not just the taxes but big portions of the premiums.
Alabama BlueCross accounted for these ACA taxes in the amounts shown on individual subscriber bills, said spokeswoman Koko Mackin:
- A fee for the Patient Centered Outcomes Research Institute. Next year it's $2 per subscriber for the year. PCORI works to control health costs through research that attempts to distinguish wasteful spending from cost-effective procedures.
- A premium tax estimated to add about 2 percent to consumer costs. This is the one insurers really hate and have been trying to delay or get rid of.
- A user fee of 3.5 percent to sell through the online marketplace that the federal government operates for Alabama and 35 other states.
- Reinsurance and risk-adjustment fees to create backstops for insurers with big medical claims as they are required to accept people with pre-existing illness under new price regulations.
Alabama BlueCross could end up losing some of that backstop money permanently if its medical claims turn out to be lower than expected. But it might also get some back if costs rise past projections, Hall said.
The ACA's risk-adjustment fee is a "zero-sum program" spread across the industry, he said. "The government doesn't keep the fee. It's just a pass-through, from some insurers to other insurers." It's unlikely Alabama BlueCross knows yet what its risk-adjustment costs will be in the end, he said.
Another backstop fee, a temporary, $63 per head annual reinsurance fee, is projected to lower average premiums for individual subscribers by as much as 5 percent or 10 percent, Hall said. That's because all insurance plans pay the fee while the $10 billion it generates next year will be used to subsidize only the smaller individual insurance market