Healthcare Reform Fees Add Up

Employers will see not only direct fees, but higher costs reflecting fees imposed on providers.

Many aspects of healthcare reform are expected to boost the cost of company-provided healthcare, including the removal of lifetime dollar limits, the pay-or-play requirement, the mandate to offer coverage to adult children and the requirement that companies auto enroll employees. Another source of costs has gotten less attention: Employers face new fees as a result of the law, and they are also likely to see cost increases that reflect the fees being levied on the providers of healthcare.

“There’s just all sorts of fees,” says Tracy Watts, a partner and senior health care consultant at Mercer. “This challenge of cost is huge.”

From 2014 through 2016, the Health and Human Services Department will levy a transitional reinsurance program fee on health plans that is expected to raise $25 billion over the three years. The funds raised will provide insurers with reinsurance for covering high-risk individuals in the start-up years of state health exchanges.

Also beginning in 2014, there will be an annual fee imposed permanently on health insurers that provide fully insured coverage, which is expected to raise at least $17 billion through 2019. A fee on pharmaceutical manufacturers began in 2011 that is estimated to raise $28 billion through 2019, and medical device makers will begin paying a 2.9% excise tax next year. These fees on healthcare providers are expected to be passed through to companies that provide health coverage.

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