Washington, D.C., Imposes One Percent Obamacare Health Insurance Tax

The costs of Obamacare keep rising. The Council of the District of Columbia has imposed a one percent tax on all health insurance policies to pay for costs associated with the Affordable Care Act. The Washington Post reports that this “first in the nation tax on all health insurance products is needed to cover the costs of D.C.’s health insurance exchange.” (This tax is in addition to the fee of $63 per insured person already imposed nationwide by the Obama administration. Obamacare already contains many other taxes at the federal level, including seven taxes that apply to people that apply to people making less than $250,000 a year.)

The Wall Street Journal notes that D.C.’s new Obamacare tax, which was designed

by the city’s DC Health Link insurance exchange, gives the city the power to tax all health-insurance carriers inside the district . . . The council opted for taxing all carriers, not just those selling in the exchange . . .

The proposal had the backing of Washington Mayor Vincent Gray and was approved unanimously by the council. The plan will fund the exchange starting next year, when it has a budget of $28.8 million. Beginning in 2015, the exchanges that 14 states and the District of Columbia set up under the law won’t have federal funding and have to become self-sustaining. Exchanges got hundreds of millions of dollars in federal startup funds.The district’s exchange had said that around 45,000 residents signed up for private coverage and Medicaid through the exchange in its first enrollment window, which ended April 30. The relatively small number of participants in private plans meant that just charging them for the operating costs of the exchange would increase the costs of their insurance coverage significantly. The assessment would likely be 1% on the amount of money each carrier took in from health-insurance premiums . . .

Insurers have previously indicated that they have met the cost of new fees under the health law by increasing premiums. The exchange says the funding plan has the backing of two insurers selling on the exchange, Kaiser Permanente and Aetna, but has been criticized by other carriers. The national insurance industry trade association, America’s Health Insurance Plans, has questioned the legal basis for the proposal and described it as open-ended and inappropriate because it is being applied to carriers not selling on the exchange. Those carriers include ones providing products such as disability income insurance and long-term care coverage, which “derive no direct or indirect benefit from the exchange,” said Geralyn Trujillo, regional director for the association.

Several state and local Obamacare health insurance exchanges, such as those in Oregon, Massachusetts, and Maryland, have failed, while costing taxpayers hundreds of millions of dollars.

The Wall Street Journal reports that the FBI is now investigating the implementation of Cover Oregon, the state of Oregon’s now-defunct health insurance exchange as provided under Obamacare:

The Federal Bureau of Investigation is looking into problems that plagued Oregon’s implementation of the Affordable Care Act, after the state was forced to scrap its problematic health insurance exchange that was never fully functional, according to people familiar with the investigation.

“The key challenge facing any prosecutor is proving criminal intent,” the Oregonian explains. “Did state officials paint an inaccurately rosy picture of the struggling health exchange? And if so, did they do so with intent to defraud the federal government? Or were they just unduly optimistic or out of touch with reality?”

As the Weekly Standard notes,

The total cost of the exchange, over its 8-month existence, is nearly $130 million. . . .Cover Oregon has been a fiscal and organizational mess from the its beginning. The earliest sign was the state’s multi-million-dollar ad campaign designed to promote the exchange, before it had even launched. That campaign consisted of costly music videos that seemed to have little to do with health insurance or Cover Oregon.

As PJ Tatler notes,

Three blue states — Oregon, Maryland and now Massachusetts — have done such a bang-up job spending taxpayer money on Obamacare websites that they have been forced to abandon those websites. The Boston Globe reports that “Massachusetts plans to completely scrap the state’s dysfunctional online health insurance website, deciding that it would be too expensive and time-consuming to fix the overwhelming number of flaws.

“Instead, officials will buy an off-the-shelf product used by several other states to enroll residents in health plans, while simultaneously preparing to join the federal HealthCare.gov insurance marketplace if that product fails.”

Massachusetts contracted with CGI Group to have its state exchange website built, at a cost of $69 million. CGI Group botched Healthcare.gov, along with the Massachusetts site.

Maryland spent $125 million on an Affordable Care Act health insurance exchange that didn’t work and was “broken beyond repair,” reported the Washington Post.

Apparently, one-third of the people who have signed for Obamacare on the federal Obamacare exchanges have not paid their premiums.

At Investor’s Business DailyJohn Merline describes the high cost of getting Obamacare up and running, noting that just “ObamaCare’s startup cost is at least $6.7 billion. Even if every one of the 8 million enrollees pays their premiums all year, the cost is more than $837 per sign-up. And if recent surveys are correct that just a third of enrollees previously lacked coverage, ObamaCare will have cost $2,500 for each newly insured person.” As Elizabeth Price Foley notes, “this doesn’t even count the double-digit increases in health insurance policies fueled by Obamacare’s cornucopia of benefit mandates.”

At Bloomberg News, Megan McArdle says Obamacare will make health-care costs soar: “Spending grew 9.9 percent in the first quarter, the highest rate in decades. That follows a 5.6 percent increase at the end of last year. The big increase was driven by the Affordable Care Act’s coverage expansion. Expect to see robust growth again next quarter,” due to “the March surge in enrollment” in Obamacare.

Obamacare has many other flaws. It contains massive marriage penalties that discriminate against married people, and huge work disincentives for some people. Obamacare’s work disincentives will add $200 billion to its cost, reports Investor’s Business Daily, contributing to a sea of red ink for the federal government.

It has also reduced hiring and induced employers to replace full-time workers with part-time employees, driving even unions that once backed it to seek its repeal or replacement. It has also caused layoffs in the medical device industry. Two doctors argued in The Wall Street Journal that Obamacare is “bad for your health,” and that “venture capital investment in medical devices” had “all but ceased” due to it. They predicted that Obamacare’s effect on medical innovation will be “devastating.” The dean of the Harvard Medical School, Jeffrey S. Flier, also argued that Obamacare would reduce medical innovation.