walkitout (walkitout) wrote,
walkitout
walkitout

The ACA Excise Tax Freakout/A Few Remarks About Section 9010 Excise Tax

So, I'm not referring to anything having to do with "cadillac" plans. I'm referring to the section 9010 excise tax.

You may read a definitive description of the section 9010 excise tax at the IRS website here:

http://www.irs.gov/Businesses/Corporations/Affordable-Care-Act-Provision-9010

This is not a tax paid by individuals. It is a tax paid by FOR PROFIT health insurance companies who are large enough (small ones are exempt; medium size ones get a break). If you have insurance from a company that self-insures, your company will not pay this tax. If you have insurance from a charitable organization, a health care co-op, or a health insurance organization that is a non-profit (for realz, not for fakes, there are some qualifiers on this), then your health insurance provider will not be paying this tax. If you have health insurance through a VEBA (kind of a union health care thing see wikipedia for deets https://en.wikipedia.org/wiki/Voluntary_Employee_Beneficiary_Association), your health insurance organization does not pay this tax.

This is a really odd tax, in that the government is going to collect a certain amount of money ($11.3B in 2015, see the IRS link above) and that will be spread out among the eligible-to-pay insurance companies based on the amount of premiums they report. Unlike some taxes, they cannot deduct the fee they pay. If they try to pass it along to customers, they'll have to pay still more tax on that additional premium they collect.

Confusing, right? Which enables some right wing nutjobs to characterize this as a HUGE TAX that will affect EVERYONE WHO BUYS INSURANCE, which is blatantly not true. Now, for starters, the health care insurance industry (the for profit component at any rate) really doesn't like this, because it is Pressure on their Profit, and the way things are written, it is really hard to weasel out of it. Further, they are really stuck because a non-profit competitor has a real advantage when it comes to selling premiums -- they don't have to pay this thing.

So. Why does this sucker exist? And is it unfair? How much will it really translate into in premiums to a typical family? Almost impossible to tell, again, enabling the right wing nutjobs. Why write this confusing and odd law?

I'll tell you why. There is an obvious, good reason, and a less obvious, even better reason. (1) There is money coming in that helps bend the cost curve down on ACA, thus reducing the likelihood of a ballooning deficit. Yay! Or not, depending on your perspective (and I would argue a good socialist should absolutely LOVE this law, even tho it reduces the deficit and thus presumably reduces stimulus). (2) Some health insurance providers will go, fuck this noise, we're going back to being a non-profit. Some employers will choose insurance through non-profit insurance organizations and/or go with self-insured plans administered by someone else. All of this will, over time, REDUCE the number of organizations affected by the fee AT THE SAME TIME that the fee increases over time. Which means the pressure on the for-profit insurers will increase, and more of them will opt for non-profit status, and more consumers whether corporate or otherwise will opt for plans through non-profits because they are cheaper. It is a fucking snowball rolling downhill about to become an avalanche of No More For Profit Health Insurance Companies.

You can really see where this is the kind of thing that conservatives would resent, and the for-profit health insurance industry would find terrifying. Also, you can really see that this is the kind of thing that someone who is starting to think of themselves as a socialist, because Bernie Is Cool, well, that someone ought to be Right On Board with this.

(Again NONE of this is about the Cadillac Plan Excise Tax, see wikipedia here: https://en.wikipedia.org/wiki/Cadillac_insurance_plan)

ETA: My husband adds: boy, Blue Shield of California losing its tax-exempt status will be impacted by this.

LA Times coverage of some of the issues surrounding Blue Shield of California.

http://www.latimes.com/business/la-fi-blue-shield-california-20150318-story.html
Tags: politics
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