Report: Healthcare fee to raise insurance costs by billions

An annual fee to raise money for President Obama's healthcare law will increase insurance premiums by billions of dollars on the whole, according to a new report by a conservative think tank.

The American Action Forum, led by former Congressional Budget Office Director Douglas Holtz-Eakin, argued that the annual fee from insurers starting in 2014 amounts to a tax on the middle class. 

The fees will escalate each year after 2014 based on insurers' premium revenue and are not tax deductible, according to Bloomberg Businessweek.


"The data suggest that roughly 85 percent of the burden will come out of the wallets of those making less than $100,000," American Action Forum said in a statement. 

The fee will raise $8 billion in its first year. Holtz-Eakin calculated that this figure will translate to an aggregate premium increase of $10.6 billion, including $2.8 billion from policyholders with incomes between $10,000 and $30,000.

Another $2.2 billion would come from people with incomes between $30,000 and $50,000, while a comparatively small portion — $41 million — would come from the most affluent, the report concluded.

"While the drafters’ intended to have insurers foot the bill for the Affordable Care Act, ultimately firms can only get the money from somebody in the economy. Who? Their customers," a release stated.

"Perhaps due to its origins, [the fee] fails to pass muster from the perspective of tax policy."

The figures come as many brace for the Supreme Court's decision on the healthcare reform law. The court could issue its opinion at any time before the end of June.

American Action Forum's report also argued that the fee will tilt the playing field against for-profit insurers.

— This story was updated at 1:55 p.m.