A $63 per head fee to reduce the cost of covering people has been disclosed by a recent legislation under President Obama’s health care overhaul. The amount that will be charged to the biggest employers in the country is expected to ultimately be passed on to the workers.
According to a report by Associated Press, the legislation will work to extract tens of millions of dollars from the largest companies to be able cover up their employees even in the worst health care scenarios. While advocates say that the charge is a temporary assessment meant to go down significantly each year, opponents believe it’s a hidden fee and something they did not sign up for.
"Especially at a time when we are facing economic uncertainty, (companies will) be hit with a mult-million dollar assessment without getting anything back for it," said Sheaks, a principal at Buck Consultants, a Xerox subsidiary.
The program is designed to raise $25 billion as part of a bigger package of taxes and fees to support the extension of the coverage to uninsured people. Over a 10 year period, $700 billion will be raised through this, including higher Medicare taxes starting Jan. 1 for individuals making more than $200,000 per year or families making more than $250,000.
Advocates insist that this is something that was already there but since the employers were focusing more on other costs in the law this cost had been overlooked.
Jason Husser, an assistant professor of political science at Elon University explained that “These aren't new services, so we're not paying for new procedures, new operations. This essentially is a way to keep costs controllable and predictable for the insurance companies." Over a course of four years, from 2014 to 2017 the fee will completely phase out, because by 2017, insurance companies will have a safety net to cover the unexpected expense.
Husser added that these are "things that we would have ended up paying for anyway. So it's a way to, in a sense, pay ahead of time so we can deal with shocks when they come up."
At a rate of $5.25 per month, the total fee will work out to $63 per year. Large employers will have to pay the fee directly to the insurance companies they are dealing with since all major companies usually pay upfront for most of the health care costs of their employees.