…Until Obamacare begins. As all health insurance exchanges are supposed to be open for enrollment on Oct. 1 of this year, funding will be an issue for the 34 states that have opted for a federally facilitated exchange. This includes North Carolina. Within the plain text of the federal health law, federal subsidies can only be distributed through state-established health insurance exchanges. These sliding-scale subsidies will assist individuals purchasing health plans who make an income between 100-400% of the Federal Poverty Level (FPL.)
Federal subsidies are limited to state-established exchanges because Congress never authorized funding for federal exchanges. The Obama Administration faces quite a dilemma in executing full implementation of the sweeping reform.
All exchanges, both state and federal, must be self-operating by 2015. Advance preparation will have state exchanges most likely enforce user fees or surcharges on health premiums – whatever states need to do to for their exchanges to survive once they will be weaned off federal start-up funds.
The federal government, meanwhile, steers down an illegal road by enforcing 3.5% surcharges on health insurers who have signed up to offer health plans within federal exchanges. The federal government has no right to do this, and neither does HHS Secretary Kathleen Sebelius. Only state-run exchanges may control such a measure. The Washington Post reports:
Starting next year, the federal government will charge a new fee on health insurance firms based on the plans they sell to individuals and companies, known as the fully insured market. Meanwhile, the provision exempts health-insurance plans that are set up and operated by businesses themselves (the self-insured market).
This tax on insurers that will participate in exchanges will be pushed onto consumers via higher health premiums. Today’s Washington post says:
Most large companies self-insure their employees; consequently, experts warn that insurance firms will pass the added costs of collecting the fee to small businesses, which tend to purchase coverage in the fully insured market.
“It’s pretty straightforward, what’s going to happen, that the tax is going to be passed along,” Rep. Jim Matheson (D-Utah) said in an interview, noting that insurance agents and underwriters have told him as much. “It isn’t really taxing the insurance companies, it’s taxing the people paying the premiums, and in this case, that’s small business owners.”
Congress gains more and more leverage on repeal of the health insurance tax.
