NU Online News Service, Sept. 24, 2:00 p.m. EDT
WASHINGTON–New taxes that would be imposed on insurers by proposed health care reform legislation would undermine the purpose of the measure, health care insurers' representatives wrote the Senate Finance Committee
Their letter talks about a $6.7 billion annual fee proposed in the chairman's language that is described "as an annual fee on health insurance providers."
They explained that the new tax would have the effect of increasing premiums by roughly 1 percent, citing Congressional Budget Office estimates.
The letter also voices concern about the decision of bill writers to reduce the age band categories for rating the risk of individuals to 4-1 from 5-1.
If age bands are narrowed too much, the letter said, premiums will rise significantly for individuals under the age of 35. Moreover, this age group is the fastest growing segment of the uninsured.
"If age bands are narrowed or compressed too much, premiums will rise significantly for these [younger] individuals, making coverage unaffordable, and resulting in a smaller and less stable pool, and higher premiums for everyone," the letter said.
The new taxes, the insurers said, would not apply to employers providing coverage on a self-insured basis, which would lead more employers to self-insure, as was reported by the Joint Tax Committee's staff in Tuesday's walk-through of the latest proposed language.
"This would encourage a vicious cycle, whereby the taxes are ultimately borne by a increasingly narrow group of consumers, including those purchasing coverage through the exchange," according to insurers.
The letter was written by officials of America's Health Insurance Plans and the BlueCross BlueShield Association.
The committee is now preparing the bill's language preparatory to Senate floor action.
If the proposed taxes are included in final legislation, the insurers said, it "would undermine the shared goals of achieving universal coverage and improving the affordability and quality of healthcare for the uninsured and for those currently with coverage."
The insurers added that the new taxes would "likely be borne principally by those obtaining individual coverage in the exchange and by small businesses."
The document was prepared by the Senate Finance Committee staff under the direction of Sen. Max Baucus, D-Mont., chairman of the committee.
"These new taxes, coupled with other provisions in the chairman's mark, would make coverage less affordable to consumers," the letter said.
It also warned that new taxes on drugs and medical devices would increase underlying medical costs, which then would be shifted to health plans and consumers.
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