In October, the health insurance industry released a report alleging that the Affordable Care Act’s taxes on health insurance plans will force companies to shift costs to consumers, adding up to “at least $73 billion in fees through 2019 and increase premiums between 2.8 and 3.7 percent in 2023.” Weeks later, Republican Sens. John Barrasso (WY) and Orrin Hatch (UT) publish an op-ed in Politico echoing this very same warning:

This is how it works: Starting in 2014, health insurance companies will be whacked with a tax based on their net premiums written in the fully insured market. Eighty-seven percent of small businesses purchase insurance in this fully insured market. It is also the place that the self-employed and uninsured go to purchase insurance.

So who will pay this tax? Ultimately, small businesses and their employees. It will most likely get passed through to employees — who will pay for it in lower wages or higher premium contributions. The average employee with a family plan will see take-home pay reduced by $5,000 over the next decade because of this tax, according to one study.

Set aside the hypocrisy of Republicans complaining about policies that pay for spending legislation — remember how they demanded that health care reform be fully paid for? — and what you have are two senators who are gulping down the industry’s kool-aid on premium increases. Both men count the insurers among their top campaign contributors, so it’s certainly no accident that they’re asking Congress to repeal taxes on an industry that’s earning record profits and is about to benefit from tens of millions of new customers as a result of the Affordable Care Act (ACA).

Of course, the appropriate response isn’t to roll back the taxes — which are necessary to finance reform and ensure that coverage expansion is fully paid for — but to strengthen provisions that help lower costs and mitigate the cost-shift. The ACA already requires insurers to spend 80 to 85 percent of their premium dollars on health care rather than administrative expenses and forces companies to justify proposed premium increases. And if the industry is now arguing that it doesn’t have the tools to control premium increases, then perhaps Barrasso and Hatch should bring back some of the cost control measures they helped defeat during the health reform debate. I’m looking at you, public option.

Sen. John Barrasso (R-WY)

Under the law, businesses are permitted to drop out of paying for employer-provided coverage so long as they pay a fine of $2,000 per employee. This number is far smaller than the $15,000 it costs businesses to provide family health benefits to each of their employees. Small businesses face an even clearer incentive to drop coverage for their employees. They are not required to pay this fine for the first 50 workers who lose coverage.

But economists and economic studies disagree. They argue that Barrasso’s calculation of whether or not dropping coverage and paying the employer penalty in ACA would be more financially beneficial to employers is too simplistic. Once businesses account for other factors — firms would need to compensate workers from whom they remove a current benefit, offering insurance helps recruit top tier employees — they find that the cost per employee actually increases. As the Urban Institute explains, “[T]here is little scope for firms being able to save money from dropping ESI [employer sponsored coverage] coverage except perhaps in firms where most workers have low wages as well as low family incomes, and these types of firms are the least likely to offer ESI today.”

For that reason, the Congressional Budget Office estimates that “the number of people obtaining coverage through their employer would be about 3 million lower in 2019 under the legislation” and actuaries at CMS found that just 1.4 million would move out of employer coverage. In fact, a comprehensive review of all the available employer surveys concluded that “the ESI market will be fairly stable after 2014 when key ACA coverage provisions go into effect.” The only analysis that found otherwise (Douglas Holtz-Eakin’s effort) relied on Barrasso’s simplistic model:

Interestingly, Barrasso attributes his claims to just two sources, “a study co-authored with my colleague, Sen. Tom Coburn (R-OK)” and “a June study by McKinsey and Company.” Barrasso’s study speaks for itself, but the now-debunked McKinsey survey has been all but abandoned by the company. As McKinsey explained after the public outcry, the survey “was not intended as a predictive economic analysis of the impact of the Affordable Care Act. Rather, it captured the attitudes of employers and provided an understanding of the factors that could influence decision making related to employee health benefits.”

After initially describing the Affordable Care Act as a one-size-fits-all government take over, Republicans are now criticizing HHS for granting temporary waivers to companies and states that may have trouble complying with the new regulations in the law (that would require plans to eliminate annual spending limits and meet medical loss ratio standards). Republicans have gone so far as to accuse the Secretary of cronyism in selecting the waiver recipients, claiming — without presenting a shred of evidence — that she granted a disproportionate number of waivers to unions. Here is Sen. John Barrasso (R-WY) pressing the case this morning on the Senate floor:

BARRASSO: Last Friday night, the Secretary of Health and Human Services granted another 150 waivers. Another 150 waivers. Now there are over 1,040 waivers covering 2.6 million individuals…Well, of those 2.6 million who have received waivers, Madam President, 1.2 million are members of unions. So that’s 46 percent of the waivers have been given to union members. Now, the website were you go to for that information, of course, the Secretary has tried to disguise how they label those individuals and union plans are now called “multi-employer plans.”

Watch it:

Two million individuals represents a relatively small percentage of American workers, but even so, the ever expanding list of waivers would lead one to dismiss the argument that the agency is a top-down ideologically driven institution that’s interested in imposing its own version of health reform on employers and states regardless of consequences. Quite the opposite. In heeding the concerns of employers and giving plans more time to adjust to the new regulations and limit any coverage disruption, HHS is displaying a degree of flexibility that’s necessary in any mass scale implementation.

It’s also difficult to argue that the Secretary is “disguising” the waivers given to unions. If you click over to this page of approved waivers, it says:

Collectively-Bargained Employer-Based Plan Applicants: Most of the other health plans receiving waivers are multi-employer health funds created by a collective bargaining agreement between a union and two or more employers, pursuant to the Taft-Hartley Act. These “union plans” are employment based group health plans and operate for the sole benefit of workers. They tend to be larger than other typical group health plans because they cover multiple employers. There are also single-employer union plans that have received a waiver. In total, 182 collectively-bargained plans have received waivers.

“Union plan” is slightly inaccurate, however, since the plans are actually governed by a board on which employers and unions are equally represented. Moreover, unlike non-union labor negotiations which can be re-negotiated annually, collective bargaining agreements tie unions down for multiple years and the waivers, I suspect, are being granted to give them more time to change their plans and adjust to the new requirements. It’s the kind of flexibility Republicans supported during the health debate, but are now against.