Reporter's Notebook

Alabama Blue Cross Shares Obamacare Tax Woes With Customers

By Jay Hancock

December 23rd, 2013, 3:27 PM

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 item 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 Blue Cross accounted for these ACA taxes in the amounts shown on individual subscriber bills, said spokeswoman Koko Mackin:

Alabama Blue Cross 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 Blue Cross 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.

14 Responses to “Alabama Blue Cross Shares Obamacare Tax Woes With Customers”

  1. Patsy says:

    “Insurance companies aren’t crazy about their share of the health law’s taxes, but mostly they’ve complained to politicians and regulators.”

    I have a question. In light of the fact that the lobby groups representing the insurance companies were in the room when Congress was creating Obamacare and in light of the fact that the insurance companies all agreed to the rules as they were originally written, why are they complaining now?

    I have another question, how can we do healthcare in America without insurance companies?

    If Obamacare is being accused as a massive government takeover, let’s fulfill the accusation and adopt a single-payer system.

  2. hwm in florida says:

    Patsy, I agree; Alabama was ignorant enough to not expand its medicaid program, leaving people in the gap, it forced its hospitals to continue covering the cost of uninsured care for those in the gap which would have been paid for if the state had expanded medicaid. they don’t account for those additional costs they have added to the people of alabama. I wonder why they don’t talk about that part of the problem on their bill to customers

    line item: how much Alabama ignorance added to the cost of care you now have to pay for because you have insurance and others who could have had it still do not.

  3. Ray says:

    Medicaid expansion isn’t free. The initial extra cost may be covered, but that doesn’t last forever, and it doesn’t create anything besides a situation where more people must be covered, at a higher overall cost, just a few years down the road.

    Most states have a barely functioning Medicaid system, many see shortfalls year after year. This doesn’t fix that bigger underlying problem, it just makes it worse by letting more people in.

    Think about buying your broke (or in-debt) friend a car. You might pay all of the cost up front, even registration and taxes, just like the Medicaid expansion proposal. Can your broke friend really afford insurance, gas, and maintenance for the car they couldn’t ever afford in the first place? Are they making more money now? Have their costs gone down?

    No, nothing changed, but they owe more money every month now, and that’s the same story with the expansion proposal.

  4. pam says:

    Lets face facts. Alabama is a red state. Red states hate President Obama. Red states will spin thousands of reasons why they hate Obama but they always seem to avoid admitting the “real” reason. Republicans invented the solution to America’s healthcare problems in 1989. The Heritage Foundation wrote a report suggesting mandated healthcare. In 2006, Gov. Mitt Romney enacted that exact suggestion and Romneycare became law in Massachusetts. Along comes a black President and he likes the Romneycare law, he sees that 98 percent of residents in Massachusetts have health insurance, he sees a very successful law and he gets it enacted for the rest of America. Obamacare is born! All of a sudden, red states and red governors don’t like mandated healthcare. They do a complete 180 degree flip-flop! What Republicans once invented and supported, now they hate the idea. Their very own idea! Is it a racial thing? You be the judge. One thing I know for sure. Republicans are hypocrites regarding mandated healthcare. What they once loved, now they hate! In my opinion, I don’t think Republicans hate mandated healthcare, I think they hate that America elected a black President twice. Regardless of what healthcare law is adopted on his watch, Republicans hate Obama. That fact can not be disputed. I am ashamed to be called a Republican. Today’s hateful and ugly and spiteful GOP is not the party that I joined many years ago.

  5. killroy71 says:

    While most Blue plans are nonprofit, they pay taxes. To be fair, the insurer should itemize ALL the taxes it pays. They can still identify which are ACA, in the interests of full disclosure, but these aren’t even all the taxes they pay.

    But the most important thing is for everyone – pro or con – to understand there’s nothing “free” about the Affordable Care Act.

  6. Craig says:

    Yes, the ACA has many overt and many more hidden taxes embedded in it. President Obama sold Democrats on the fantasy that they could provide insurance to 30 million people without adding a dime to the deficit and making insurance cheaper for everyone. He also claimed that everyone who liked their insurance or their doctors would be able to keep them. This has since been demonstrated to be a bold faced lie (not by “racist” Republicans but by the Washington Post, which gave it their 5 Pinocchio award). So now we see the true cost of the ACA, which needed to be hidden or it never would have garnered the votes to pass Congress. This has absolutely nothing to do with racism or Alabama’s wise decision not to expand Medicare (which in 3 years will cost billions to to those states that did expand their already broke plans and are stuck with 100% of the tab). The GOP does not “hate” Obama out of racism (you will recall that we were not big fans of Bill Clinton or Harry Reid either and that Democrats hated George Bush. Why play the race card just because your signature law is coming apart?) We do hate the huge expansion of the reach of the federal government taking over not just one-sixth of the economy but also Obama’s decree that our former insurance plans needed to be cancelled so that we could be forced to buy more expensive ones on a website that doesn’t work, just so that he could sell the lie that this plan was cost-free. It would have been nice for the media and Democrats to identify all of these costs before they voted on this but we’ll have to accept the late disclosure and see where the chips fall in the midterms.

  7. Zan says:

    Alabamian’s “Dare Defend Our Rights” and don’t like Big Fed taxing our individual inalienable rights for our own good. We don’t hate Obama, we hate his politics. We abhor the nanny state. We are a sovereign State in These the United States, not a subject of this out of control Federal Government. We are NOT the Republican Party, we are a vast and diverse people, a “red” state to outsiders, which means very little in the politics of the State.

  8. poest says:

    The question is: Should the government tell (order) us what to do? Or, should government guide us while we pursue our own ends? The Un-Affordable Care Act is and order!

  9. Tommy says:

    I have a friend. He works as a self employed laborer. He is a middle age man, his siblings are deceased, his parents are deceased, he never married and has no apparent family. He has always been pretty healthy. No chronic illnesses. No serious accidents until recently. About 6 months ago, he was involved in a three car accident. He was rushed to the hospital emergency room. He has a broken back, a severed spinal cord from the waste down and he has been in a coma ever since the accident. Doctors say if he wakes up, he’ll probably never walk. With no health insurance, he currently gets uncompensated care from the hospital. Doctors say my friend could live for a very long time because he is still very strong. If this man lived in Canada, he would have care from the government. Regretfully, he lives in America and nobody knows what will happen to him. I guess if he had family, they could decide to stop his feeding tube and let him starve but he has no family that we know of. The hospital says they must care for him because it is the law. I wonder what Zan would do if he was the hospital administrator and if this man was in a hospital in Alabama? I hear that during the civil war, the rebels shot all union prisoners and they left.all wounded soldiers to die on the battlefield because it was too much bother to care for them. Is that true? Is that what you mean by individual inalienable rights? In other words, you’d better help yourself because I ain’t helping you! I’ve got mine, screw you, you’re on your own!

  10. Bob says:

    Uh, I do believe that the Alabama Blues have forgotten one teeny little fact. For 2014, anyone who buys an Individual product will have the benefit of a national reinsurance program. The 2014 value of that program will be greater than the dollar figure shown in the article for taxes and fees, by roughly 50 percent. Hence, the net cost for 2014 attributed to the direct effects of the ACA should actually be a negative number.

  11. Randy says:

    All this discussion begs the question…

    What in the world do politicians put in the drinking water in Alabama that has virtually their entire population voting for people that like nothing more than to keep them uneducated and living in poverty? Alabama is near the top of the list among states that receive the most Medicaid funds. That’s by design, not by accident! If Alabama pols are going to work so hard to keep you stupid and poor, you need to start voting for different people.

  12. Marylyn says:

    If you want to see just how cruel Republicans are in Alabama, simply do a web search for…

    “The Cruelty of Republican States in One Chart”

  13. Stephen says:

    First of all I am totally surprised that this isn’t a bigger issue considering that the “War on Poverty” started by LBJ was and still is a total debacle.

    Secondly, this country was built on the precepts of individual liberty and individual responsibility. Therefore, in the case of the ACA it is another “Robin Hood” campaign of the Progressives.

    Let me state my case so you all on the Left can hate me in one big swoop.

    1. There is nothing in the Constitution allowing for programs like Social Security, Welfare, MedicAid, MediCare, and now the ACA (remember it’s a tax).
    2. This means that the above programs are extra-constitutional.
    3. This means that the above programs should not be able to exist unless you force them down the throats of the American people using the Judicial system with like minded, ideologically compatible sycophants on the bench.
    4. It is also not in the Constitution where I am to be forced to take care of my neighbor against my free will.
    5. It is also not in the Constitution where my neighbor is to be forced to take care of me against his/her free will.
    6. Therefore, the Federal Government of the last hundred plus years going back to the days of Theodore Roosevelt and the precursor of the modern FDA; Social Security, Great Society, and the ACA should not exist under the auspices of the Constitution.
    7. However, there is a place for these programs and that is at the State level that is in line with the 10th Amendment of the Constitution.

    I am all about individual liberty, individual freedom and minimal government.

  14. Dave says:

    Nobody is getting forced to do anything. It’s simply about the things people need to understand when they want to live in a democratic society. You see Stephen, in a democracy, there are elections. The people are elected by popular vote. You think you are being forced to pay taxes to support the so-called “freeloaders” when, in reality, the candidates that agree with you simply aren’t getting elected to enact the policies that you want. Why? It’s pretty simple. Even an idiot can understand the concept. Are you ready? It’s because the policies that you love so much apparently are not popular. Here’s some basic advice. It’s politics for dummies. Ready? Okay, here it is…

    Win more elections. Got that?