Obamacare’s Health Insurance Tax Targets Consumers and Small Businesses


Heritage Foundation Issue Brief summary provided by The Market Institute.

On October 16, 2013, Heritage released Issue Brief #4075 analyzing the impact of Obamacare’s Health Insurance Tax on consumers and small businesses.

The Affordable Care Act imposes a tax on individuals and small businesses in 2014, by an additional 2-3%. This will lead to an adverse impact on small businesses, but not large employers because they typically self-insure. The IRS categorizes it as the “Health Insurer Provider Fee” while opponents simply call it a tax. The rate however, is variable, and will be determined by the Treasury each year to raise a specified amount of revenue.

While most large employers self-insure, almost all small businesses do not and they will be the ones getting hit with this tax. The result will be a general reduction in employment. Finally, and most importantly, the tax is hidden from consumers purchasing health insurance. It will lead to insurers passing on the tax to consumers by way of higher premiums.

A Heritage Foundation health insurance expert had predicted long ago the Affordable Care Act would ultimately increase premiums (Heritage Foundation Blog).

HHS Secretary Kathleen Sebelius denied that Obamacare was a “government takeover of anything” (Heritage Foundation Blog).

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