Obamacare’s regulatory surtax on exchange insurance plans

Despite over 2,000 pages of legislative text, many key details of President Obama’s national health care law were left up to regulators to work out, with Secretary of Health and Human Services Kathleen Sebelius given the lead role. The Obama administration wanted to avoid issuing potentially controversial health care regulations during an election year, but now that it’s over, regulations are starting to roll out. In a news dump this past Friday afternoon, HHS released 373 pages of new insurance regulations, and buried on page 299 is a proposed 3.5 percent monthly “user fee” to be levied on the premiums collected by insurers who offer policies on the new government-run exchanges. Effectively, it’s a regulatory surtax that will inevitably be passed onto individuals who purchase insurance on these new exchanges. …

Regardless of whether this authority exists, it’s another example of how the Obamacare’s true costs are only going to become known over time. When the law was written and it said “no federal funds” after January 1, 2015, as far as the Congressional Budget Office was concerned, that meant the exchanges won’t impose recurring costs on the federal government. But, now it’s clear that there will be ongoing costs, which the federal government will impose on insurers, who will in turn raise premiums on exchange consumers who receive federal subsidies.