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How ACA funding could lead to higher costs for employers and consumers

Funding the Affordable Care Act (ACA) won't be cheap. In fact, according to the Congressional Budget Office, costs could exceed $1 trillion over the next decade1. That averages out to about $100 billion a year — or approximately $8.3 billion per month for 10 years.

 

So where's funding coming from? The fees, summarized below, are intended to help fund the ACA and they may impact employer budgets and result in higher premiums for consumers. Here is a list of some of the fees:

 

What do these new fees mean for employers and consumers?
Wellmark's priority is to keep its members fully informed. These new fees may potentially impact the premiums that employer groups, or individuals pay for their health insurance. Wellmark will continue to be a responsible steward of every premium dollar. As a mutual insurance company, you can rest assured that Wellmark does not increase premiums in order to drive up profits for shareholders. We put our members first.

 

Where can I get more information?
Wellmark is here to inform, lead, assist and support you through all the ACA changes as you make your decisions about your group health plan.

 

For more information about ACA fees and their potential impact call your Wellmark representative.

 

DECRIPTION OF FEE ESTIMATED AMOUNT
FEE WILL RAISE

Prescription Drug Manufacturers - This annual fee is imposed on manufacturers and importers of brand name prescription drugs who have annual sales of at least $5 million.

$26 million through 20192

Medical Device Manufacturers - This annual fee, which went into effect January 2013, imposes an annual 2.3% assessment on the sale of any taxable medical device by the manufacturer or importer.

$29 billion over 10 years3

Health Insurance Companies - Beginning in 2014, health insurance companies with annual net premiums exceeding $25 million will pay an annual health insurer fee.

$60 billion through 20194

 

Transitional Reinsurance Program - From 2014 through 2016, all health insurance carriers, including third-party administrators working on behalf of group health plans, will be assessed fees to help fund a transitional reinsurance program. The purpose of this program is to help stabilize premiums in the individual market (where people pay for coverage on their own) for those with pre-existing conditions.

$25 billion over the three-year period5

 

Patient-Centered Outcomes Research Institute (PCORI) - A fee will be imposed on all health insurance carriers, including third-party administrators that work on behalf of group health plans to help fund PCORI's comparative effectiveness research. The dollars will be used to help conduct clinical effectiveness research to evaluate the effectiveness and outcomes of medical treatments and has a goal of determining which medical treatments and health care approaches work best. The findings of this research will be shared with patients and physicians to help them make informed care decisions.

$3.5 billion through 20196

 

 

1 CBO Releases Updated Estimates for the Insurance Coverage Provisions of the Affordable Care Act. (March 13, 2012). Retrieved January 4, 2013, from http://www.cbo.gov/publication/43080

 

2 Section 1404 of the Health Care and Education Reconciliation Act of 2010. (2010). Retrieved January 4, 2013, from http://www.healthcare.gov/law/resources/authorities/reconciliation-law.pdf 

 

3 IRS Releases Final Rules For Health Law's Medical Device Tax. (December 6, 2012). Retrieved January 4, 2013, from http://www.kaiserhealthnews.org/Daily-Reports/2012/December/06/health-reform-medical-device-tax.aspx?p=1

 

4 Section 1406 of the Health Care and Education Reconciliation Act of 2010. (2010). Retrieved January 4, 2013, from http://www.healthcare.gov/law/resources/authorities/reconciliation-law.pdf 

 

5 http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/Transitional-Reinsurance-Fee.aspx

 

6 http://www.pcori.org/how-were-funded/

 



Related Information

Blue Cross and Blue Shield Association publications on health care reform issues:
»   12 Myths About Health Insurance pdf image
»   Health Care Spending by Major Payor pdf image
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