It’s been estimated that the ACA will raise taxes by $813 billion over 10 years. Over 12 of these new taxes will be on families making less than $250,000 a year. According to the Joint Committee on Taxation, about 73 million taxpayers earning less than $200,000 will see their taxes rise as a result of various Obamacare provisions. The CBO originally estimated that Obamacare would cost $940 billion over ten years. That cost has now been increased to $1.683 trillion. Below is a list of some of the new taxes needed to pay for it.
Medicare investment tax: A 3.8% tax on investment incomes for single taxpayers over $200,000 or couples over $250,000. This is not adjusted for inflation so more and more taxpayers will be liable similar to the Alternative Minimum Tax (AMT). These funds are officially designated for Medicare but can be spent elsewhere.
Health Insurance Tax: An annual fee on insurers that would be likely be passed onto small businesses through higher health care premiums. The annual “fee” doesn’t expire and began at $8 billion in 2014 and was expected to steadily increases to more than $14.3 billion. A National Federation of Independent Business study found that as a result of this tax, family premiums are expected to go up at least $5,000 per year by 2020. This tax will also reduce private-sector employment by 125,000 to 249,000 jobs in 2021.
Tanning Tax: A 10 percent tax on tanning services that would impact an estimated 18,000 small businesses nationwide. According to the non-partisan National Taxpayers Union, the tax combined with the 2007-2009 recession, has caused 3,100 businesses to close and 35,000 lost American jobs. The tanning tax is undeniably hurting small businesses, but it has been particularly hard on female business owners. While women account for approximately 26% of all business owners, women own an estimated 75% of tanning businesses.
Cadillac Tax: A 40 percent tax on health coverage that costs more than what the government deems “appropriate.” While these plans have higher costs, they also have lower deductibles and higher benefits. This tax will hurt small businesses which typically pay upward of 18 percent more than others for health insurance. The tax is indexed for general inflation (not health care costs) so, as health care costs continue to rise, more and more people will be forced to pay this tax each year.
Elimination of tax deduction for employer-provided retirement prescription drug coverage in coordination with Medicare Part D: The Congressional Budget Office initially projected that this tax would cause an estimated 90 percent of seniors to lose their retiree drug coverage by 2016.
Medicare Payroll Tax: The Medicare payroll taxes would increase to 2.35 percent and, for the first time, allowed funds designated for Medicare to be spent elsewhere.
Brand-name drug tax: Manufacturers and importers of brand-name drugs would pay a tax of $3.0 billion per year for 2012 through 2016, $3.5 billion for 2017, $4.2 billion for 2018, and $2.8 billion for 2019 and thereafter.
Medical device tax: Manufacturers and importers of certain medical devices would face a 2.3% excise tax. One study estimated the tax could result in job losses in excess of 43,000 and employment compensation losses in excess of $3.5 billion. It would also disproportionately affect small and mid-sized businesses. Currently, 81% of American medical device manufacturers are small businesses (1-50 employees), and over 91% of medical device manufacturers are small or mid-sized businesses (under 1,000 employees). In April 2010, the Centers for Medicare and Medicaid Services Office of the Chief Actuary explained how various taxes and fees, including the medical device excise tax, would be passed onto patients in the form of higher prices with an associated increase in overall national health expenditures ranging from $2.1 billion in 2011 to $18.2 billion in 2018 and $17.8 billion in 2019.
Fewer deductible medical expenses: New limits were placed on the deductibility of medical expenses on individual income tax returns. This provision would raise the 7.5% adjusted gross income floor on medical expenses deductions to 10%. The adjusted gross income floor for those 65 and older (and their spouses) remains at 7.5% through 2016.
Flexible Spending Account limits: Flexible Spending Accounts would be limited to a maximum of $2,500 (inflation-adjusted after 2013). This provision hurts families with special needs children who frequently used these accounts to pay for their children’s care.
Health Savings Accounts & Flexible Spending Account limits: Consumers are prohibited from using Health Savings Accounts and Flexible Spending Account funds to purchase non-prescribed items, including over-the-counter medication (except insulin).
Individual mandate: Starting in 2014, based on their income levels, all U.S. citizens and legal residents must have “qualifying” health coverage or pay penalties. For an individual, the penalty began in 2014 at either $95 or 1.0% of household income, whichever is larger. In 2015, it grew to $325 or 2.0%. In 2016, it reached $695 or 2.5%. (For families, the figure will be $2,085.) After 2016, the amount rises by a cost-of-living adjustment. This hits the middle class the hardest because low income individuals are exempt from the mandate, as are upper middle class families (based on calculation of income and plan costs). So that leaves families with incomes approximately $25,000 – $100,000 and over $150,000 to comply with the mandate.
Employer mandate: This required some firms to provide insurance, pay penalties or both. The penalties are based on (1) the number of fulltime (or part-timers counted as full-time equivalent) employees, (2) whether or not the firm offers coverage, and (3) whether or not one or more employees qualify for government subsidies toward the purchase of health insurance. An employee qualifies for a subsidy if his or her household income is below 400% of the federal poverty line ($88,000 for a family of four today).
Here are some of the rules that make an employer qualify:
- More than 50 full-time employees.
- Does not offer insurance. One or more employees receiving premium subsidies. Penalty = $2,000 per full-time employee (minus the first 30 employees).
- Offers insurance. One or more employees receiving premium subsidies. Penalty = lesser of $3,000 per subsidized employee or $2,000 per full-time employee (minus the first 30 employees).
- Offers insurance. Has no employees receiving premium subsidies. No penalty on employer.
- 50 or fewer full-time employees. No penalty.
- Part-time employees’ hours will be converted into full-time equivalents for purposes of these calculations. For example, if 6 employees each work 5 hours per week, they will count as if the firm had one additional full-time employee (calculated monthly).
- Employers with more than 200 employees will be required to auto-enroll employees into the employer’s health plans, though the employee may opt out.
- There are extra penalties for firms who have a waiting period of more than 90 days before employees are eligible for insurance.
- Obamacare creates an unelected and unaccountable board known as the Independent Payment Advisory Board (IPAB), which is comprised of 15 unelected bureaucrats with terms longer than the President who will be able to ration care for seniors on Medicare by determining which services will and will not be covered.
- Obamacare creates 159 new regulatory agencies.
- Obamacare has 85 (and counting) new regulations that already total over 13,000 pages. This will result in over 60 million hours of new compliance and paperwork requirements for states and employers – with a total cost of $27.6 billion (which is the floor estimate, not ceiling). Just over $20 billion of these costs will be borne by our employers and private entities while states will absorb just over $7 billion of these costs. The top ten costliest regulations alone account for 88 percent of these regulatory costs.
- There are already 63 pages to define what a "navigator" is to help explain ObamaCare to Americans. California alone wants to hire 21,000 to explain Obamacare.
The ACA was to cut more than $764 billion from Medicare. This figure comes directly from the Congressional Budget Office. Below are some examples of where those cuts come from.
In fact, for every $500 in increased payments for preventive services and prescription drugs, the rest of Medicare is cut by over $7,000. These cuts are achieved through reduced payments to Medicare providers and Medicare Advantage plans. As a result of the ACA, Medicare reimbursement rates will now be even lower than Medicaid, which the Chief Medicare Actuary predicted that “Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.” The 2012 Medicare trustees report concludes that these lower Medicare payment rates will cause an estimated 15 percent of hospitals, skilled nursing facilities, and home health agencies to operate at a loss by 2019, 25 percent to operate at a loss in 2030, and 40 percent by 2050. Operating at a loss means these facilities are likely to cut back their services to Medicare patients or close their doors, making it more difficult for seniors to access these services.
Additional Impact on Seniors
- $260 billion from hospital services
- $156 billion from reductions to Medicare Advantage plans (other estimates place this closer to $308 billion when you consider how these cuts interact with other provisions)
- $39 billion to skilled nursing services
- $17 billion to hospice services
- $66 billion to home health services
- $33 billion to other services
- $31 billion in Disproportionate –Share Hospital cuts (in addition to $25 billion in Medicaid Disproportionate-Share Hospital cuts)