With the November election debacle behind us, inquiring
minds want to know what to expect from ObamaCare in 2013. The answer is simple and resounding:
“Taxes”. Lots of them. With all due respect to Dr. Seuss, it’s
“Taxes here. Taxes there. ObamaCare taxes are everywhere!”
How can this be in light of President Obama’s recurrent promises
not to raise taxes on anyone other than the “wealthy”? Ah what a difference a word makes. In this case, the word is “income”. All of
President Obama’s recent assurances that middle class Americans won’t end up
paying higher taxes referred only to “income”
taxes. In reality, most American – 77%
according to the Tax Policy Center
-- will be paying far more in taxes in 2013 than they did in 2012.
This is due in part to hefty new
taxes associated with the ever-unpopular healthcare reform bill -- ObamaCare --
which is due to be fully implemented in 2014.
As with previous waves of ObamaCare
implementation, the third set of installments, due this year, will consist of
new taxes intended to pay for increased
subsidies for health insurance and the significant expansion of Medicaid.
One of the new taxes is a 3.8% surtax
on investment income that will impact individuals making more than $200,000
a year and couples earing more than $250,000. This income threshold is far less
than the $400,000 cut-off for income
tax hikes in the recently passed bill to avoid the so-called “fiscal cliff”. Furthermore, taxing investment income has
nothing to do with healthcare.
These same not-so-wealthy people will be hit this year with an
additional 0.9% Medicare payroll tax. The current 2.9% Medicare payroll tax
increases to 3.8% in 2013. For someone who is self-employed this increase will
represent a significant ding to take-home pay.
The goal here is apparently to raise $318 billion in additional
Medicare taxes to help pay for the bloated and ill-conceived healthcare reform bill
that Nancy Pelosi assured us was both “cost saving and deficit reducing”.
Another of the new ObamaCare taxes slated
to strike this year is the 2.3% medical
device tax. This tax will apply to
companies making anything from heart valves to stents to joint replacement
parts. The 2.3% is a tax on total revenues, regardless of whether or
not the company has any profits at all. That means that a company doing $100
million in revenues will be required to pay an
additional $2.3 million in taxes, even if they haven’t made a dime in profits. Given that many medical device companies are
small and work on razor-thin margins, this new tax will likely drive production
and high-tech jobs overseas as a matter of pure survival. The government is hoping to raise another $29
billion via the medical device tax. This
will only happen, however, if those companies don’t move abroad in order to
stay afloat or close entirely.
Then
there’s the new Flexible Spending Account (FSA) Tax that caps the amount
of money that workers can set aside tax-free for medical expenses. Previously,
there was no government cap on these funds. Beginning this year, however, the federal government
is limiting FSAs to $2,500. Traditionally,
people who have found Flexible Savings Accounts most valuable are those who
have predictable, ongoing healthcare needs such as organ transplant patients,
those on kidney dialysis, or individuals with nearly any chronic disease,
including diabetes or congestive heart failure. Because workers will be able to put fewer pre-tax dollars into these
accounts, their tax bills will increase because their taxable income will be
higher — even if their overall income remains the same. This change was implemented in order to
collect another $13 billion from taxpayers to help pay for our newly reformed
healthcare.
Allowances for Itemized Medical
Deductions are also changed under ObamaCare in 2013. This year, the healthcare
expenditure threshold in order to itemize is increased from 7.5% of adjusted
gross income to 10%. This will result in yet a further blow to those with the
most significant medical expenses by limiting the portion of costs they can
deduct on their taxes. Estimated amount the government will raise with
this ObamaCare tax change: $19 billion.
One of the very few components of the healthcare reform bill that has
been broadly favored, even by many conservatives, is the “non-discrimination
for pre-existing conditions” clause. But
guess who’s going to be paying for that? The cost for covering those with
pre-existing conditions is going to be paid for with a new $63-per-head fee. An
estimate 190 million Americans will owe the per-person fee which is designed to
raise $25 billion. The monies will go
into a fund administered by the Department of Health and Human Services, and
will be used to protect insurance companies from the cost of covering people
with medical problems. You just can’t
make this stuff up!
But wait –That’s not all. There
are also the new “taxes” for individuals and businesses that fail to comply
with ObamaCare’s mandate that they purchase government-approved health
insurance. According to the law, virtually everyone must have healthcare
insurance by 2014. People have the
option, however, of paying a “tax” (according to the Supreme Court, it’s not a
“fine”). As most other taxes in the
Unites States, the “failure to comply” tax is based on income and starts at $95
a year for individuals and rises to $695 a year. More than 6 million people are expected to
decline to buy the mandatory insurance.
As a result, the Congressional Budget Office anticipates that penalties
(oops, sorry Justice Robert: “taxes”) for non-compliance will generate more
than $130 billion in the first decade they are in effect.
In a stunning example of the bill’s complete idiocy, the law then
allows people to purchase a health-insurance policy after getting sick for the same price they would have paid if they
had bought it earlier – back when it could legitimately have been called
“insurance”. Insurance, as a construct,
only makes sense if people are paying premiums ahead of time to mitigate the cost of unpredictable medical events.
This bastardized model for healthcare insurance provides little incentive for
one to pay premiums when they are well. But the “failure to comply” taxes do
generate revenues necessary to pay for the stupid bill, and that was apparently
the point all along.
In total, ObamaCare will result in new taxes and fees totally in the
range of $700 Billion over ten years –
monies required to help pay for the bill’s grossly expanded entitlements and
healthcare insurance programs that we were told would be “cost saving”.
As each new component of ObamaCare is unveiled, Americans will get a
clearer and clearer picture of its travesty. Ultimately, the promise of
“affordable” insurance will fail by an even greater margin than the Democrat’s
stated goal of “universal coverage.” Costs
will continue to escalate, personal choice will be limited, and quality of care
will decline.
In the prescient and oft-quoted words of political satirist, PJ
O’Rourke, “if Americans think healthcare is expensive now, wait ‘til they see
what it costs when it’s free”. Not even
Dr. Seuss has a clever rhyme that.
