◼ Wondering why the unemployment rate has been near or above 8 percent for nearly four years? The Federal Reserve has an answer for you: Obamacare. - Sally Pipes/Forbes
Earlier this month, the Fed released its latest “beige book” – a monthly report on economic conditions across the country. The book noted that employers across the country have “cited the unknown effects of the Affordable Care Act as reasons for planned layoffs and reluctance to hire more staff.”
The more businesses learn about the president’s health reform law, the more they’re coming to realize that “affordable care” is the last thing it will provide. And that’s in large part due to the multibillion-dollar tax that Obamacare is set to levy on health insurance companies.
Starting next year, insurance companies will have to remit $8 billion to the federal treasury. The tax climbs to $11.3 billion in 2015 and 2016, to $13.9 billion in 2017, and to $14.3 billion thereafter.
Insurance companies will pay based on their share of industry revenues in a given year — the more revenue, the bigger the hit....
Obamacare’s premium tax will also distort the insurance market by tilting the playing field heavily against for-profit insurance companies like WellPoint, UnitedHealthcare, and Aetna.
Unlike just about every other tax they pay, for-profit insurers won’t be able to deduct the premium tax from their earnings. So a good chunk of their income will effectively get taxed twice — once to satisfy Obamacare’s premium tax, and then again when they pay the corporate tax. That means they’ll have to raise premiums even higher.
Non-profit insurers like Blue Shield of California don’t pay income taxes, so they won’t face this double whammy when paying the premium tax.
What’s more, the law exempts non-profits that do 80 percent or more of their business with the government from the premium tax altogether. That gives non-profits an even bigger leg up against their for-profit competitors.
