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CHRISTOPHER TAYLOR'S BOOKS

Tuesday, July 10, 2012

HOW "OBAMACARE" AFFECTS YOU

"We have to pass the bill to see what's in it."
-Nancy Pelosi

For a few years now, businesses in America have been holding their breath, hoping the increased expense and regulatory burden of the "Affordable Care Act" or the Government Health Insurance Takeover Act, as I like to call it, will not land on their already overloaded backs. Uncertainty about this future and the slow trickle of regulatory and legal cost as it is slowly implemented is already causing businesses to be reluctant to hire, to cut back hours, and to hire more part time workers.

This has had a profound impact on the economy of the United States already. Now the Supreme Court has declared this bill unconstitutional... yet still okay because now magically its a tax despite being passed as not being one. Which means all those businesses uncertain they will survive or how they'll pay for the future increase in costs are hoping against reasonable hope that the bill will be repealed by a new congress next year. Which as I said isn't a very rational hope.

But there's a more direct, personal cost that this bill imposes on individual citizens. Henry Blodget at Business Insider has some useful data about the cost you will face:
  • Less than $9,500 income = $0
  • $9,500 - $37,000 income = $695
  • $50,000 income = $1,000
  • $75,000 income = $1,600
  • $100,000 income = $2,250
  • $125,000 income = $2,900
  • $150,000 income = $3,500
  • $175,000 income = $4,100
  • $200,000 income = $4,700
  • Over $200,000 = The cost of a "bronze" health-insurance plan
You'll notice that the richer you are, the less of a financial burden this is, by a very large margin. You'll also notice that the bulk of the cost is paid for by people making under $150,000 a year. In fact, 75% of this tax - according to the Supreme Court - is paid by the middle class, a gargantuan increase in taxes. This is, simply put, the largest tax increase in the history of mankind in terms of total cost, and the largest tax increase in American history in terms of percentage of income.

I fall into that under $9500 category right now, which means I'll be forced by law to be a freeloader, unable to opt out. You who make more money? You'll be paying for my insurance which I did not ask for, do not want, but cannot avoid. Others who can avoid this cost? American Indian tribes, religious sects who pay no social security such as Mennonites, and people who work at a job where employers only offer plans that cost more than 8% of the employee's income.

Those folks get "free" healthcare. Its not free, they just don't have to pay for it. Everyone else pays for it for them.

Don't want to pay this? I don't blame you. But the IRS is hiring 16,500 more employees to enforce this law, and they'll have the power to garnishee your wages, seize your assets, and sue you for the money that this law says you owe.

Oh, it goes on. Here's some other ways this bill increases costs and dependence on government:

If you've been taking advantage of the Flexible Spending Account laws which let you set aside a personal fund for health problems, you won't be able to do it as much. The previous limit was $10,000 a year, but this new legislation reduces that to $2500. After all, if you do that, you won't be so dependent on the government's new laws. And you won't be able to use this fund at all to buy over the counter medicine.

If you have been deducting from your taxes for medical expenses, the minimum cost to do so is presently 2.5% of your gross income. That is being raised to 10% with this bill, so you can't deduct anything unless you incur vast costs.

If you already have a great health care plan, you will have to pay a tax equal to 40% of the value of that plan (unless you get a waiver, like most big unions were given by the White House).

If you and your spouse make $250,000 a year or more, then you get nailed with an even higher medicare tax.

And business gets nailed here too, particularly medical business. For example, all medical devices that cost more than $100, like a CAT scanner or a crash tray that helps restart your heart, are assessed a 2.3% excise tax. This means your hospital stay costs more because the equipment costs more.

In other words, this legislation does nothing to reduce cost of health care and does a lot to increase cost.

Also, this bill imposes a 3.8% surtax on "investment income" when your adjusted gross income is more than $200,000 ($250,000 for joint-filers). This increases costs for businesses.

All businesses with any employees face higher costs, but ones that are small enough get money back from the government to help offset those costs.
Consider the following questions: Do you have 25 or fewer full-time employees? Are their average annual wages less than $50,000? And do you contribute more than 50 percent of your employees' total premium costs?

If your answers to those three questions are "yes," then you might receive some assistance with your premiums, thanks to a tax credit of up to 35 percent of your contribution toward your employees' health insurance for this tax year through 2013. The credit will increase to up to 50 percent for tax years 2014 and 2015.
You still have to pay, you just get that money back. Assuming you had enough money to pay it in the first place. This threshold means that businesses will work hard to keep their total insurance cost down. That means less hiring and more part-time workers. And fewer businesses as some just shut down because they cannot afford the expense.

Americans now have less freedom in how to handle their money and their lives, less power over their insurance (because the system will not allow you to keep your previous doctor in all cases), and less money in their pockets to spend on other things. Which means it will damage the economy by slowing spending, investment, hiring, and expansion.

Meanwhile, the federal government gets bigger and bigger. To handle this law, the various agencies have already crafted 13,000 new regulations. Because this doesn't just cover the mandate being discussed here:
The Health and Human Services Department "was given a billion dollars implementation money," Republican Rep. Denny Rehberg of Montana said. "That money is gone already on additional bureaucrats and IT programs, computerization for the implementation."

"Oh boy," Stan Dorn of the Urban Institute said. "HHS has a huge amount of work to do and the states do, too. There will be new health insurance marketplaces in every state in the country, places you can go online, compare health plans."
...
According to James Capretta of the Ethics and Public Policy Center, federal powers will include designing insurance plans, telling people where they can go for coverage and how much insurers are allowed to charge.

"Really, how doctors and hospitals are supposed to practice medicine," he said.

The health department is still writing regulations, which can be controversial in and of themselves. One already written, for instance, requires insurance plans to cover contraception.
And that means the government takes more of your life over, giving you less freedom and less personal responsibility. So you can let Big Brother handle everything instead of doing it yourself.

See, if you've been living under a socialized medicine system for decades, or all your life, you don't see all the costs that it incurs on you, the way it saps money out of the economy, and the way it limits your liberty. Its like being born in an abusive house; you grow up thinking that's just how families are. You don't know any better, and don't feel that pain because the change happened so long ago.

America is being hit with that pain right now, for the first time, in the middle of the worst economy in almost 100 years, at the brink of even worse economic conditions. And for what? To compel people to buy a product from private companies, a product the people who implemented this call terrible from companies the people call evil.

And this is what the Democrats are cheering about and gloating over.

*UPDATE: Commenter Eric notes that the cost scheme laid out above only applies to people who do not have or buy their own insurance; this is true. If you have a job that provides insurance or presently buy your own, you won't get touched.

If you are a young person who doesn't need insurance, or a very wealthy person who just pays up front, or between jobs and aren't covered, or self-employed without insurance, well you have a choice. Pay what is listed up there or buy yourself insurance. Which do you think is going to be more expensive?

1 Comments:

Anonymous Eric said...

It is worth noting that at the individual level (i.e., if you are not a business owner) then the tax only effects you if you don't carry insurance or don't qualify for Medicare... so somewhere around 80% of Americans won't be paying that tax, but the ones who do will probably be lower-middle class uninsured and those in the under-$37K bracket.

The redefinition of Health Savings Accounts (and Flexible Spending Accounts) could really effect me personally, as that is the ONLY insurance I have found that helps my family actually pay less for insurance and medical care. Of course there is no way to know for sure what the new regulations will do to my premiums, but it sounds like they will certainly be going up.

The biggest problem I see for small business (under 50 employees) is that their employee premiums will go up. The ONE measure in Obamacare that might have actually helped lower premiums for small business was the state managed insurance exchanges that would allow small businesses to pool employees together to get a better 'group' rate... and many states (including my own) are refusing to implement this measure as a means to give the federal government the middle finger... an effort I support for now but maybe not so much after my premiums go up.

Large companies and doctors, moreso than individual taxpayers and the middle class, are the ones who really get screwed by Obamacare... at least as far as I can tell.

9:58 AM, July 10, 2012  

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