New premium taxes assessed on health plans in 2014 could lead to average annual premium increases of about $200 a person and could cause two to three percent increases in premium costs across the country, according to a report by the consulting firm Oliver Wyman.
Across the country, Oliver Wyman estimates the average American with an individual health plan will pay an extra $217 a year for 10 years as a result of the premium tax, with insurers incorporating it into premium rates. The average family with an individual plan could pay about $514 extra a year, the study found, while families in small and large group health plans could pay an extra $700 a year.
The Affordable Care Act asses the tax based on each health plans' net premiums, with a starting baseline of $8 billion to be collected in 2014. By 2022, the tax is expected to yield the federal government more than $100 billion in total.
America's Health Insurance Plans (AHIP) commissioned the Oliver Wyman analysis and is supporting legislation repealing the tax, as well as other market reforms the trade group says will help control healthcare costs.
The study predicts that families with individual health plans in New York, Massachusetts, Connecticut, Rhode Island and New Hampshire will see some of the largest price shocks associated with the tax, with between $5,000 and $10,000 extra premium costs per family over the next decade.
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Medicare Advantage plan members in New Jersey, Florida, Louisiana, New York and Texas are likely to pay about $4,000 more over the next 10 years, and Medicaid managed care members in New York, New Jersey, Minnesota, Rhode Island and Washington D.C. are likely to see extra costs of about $2,500, according to the study.
The study used data from 2010 health plan premiums, and estimates include the ACA exemptions. The tax applies to all fully-insured plans and Medicare Advantage, Medicare Part D and Medicaid managed care plans. Not-for-profit health plans pay the tax on only half of their net premiums and are exempt if more than 80 percent of their income is from public programs covering elderly, low income or disabled patients.
Medical device companies are subject to a similar tax under the ACA.