Be careful with the so-called ‘fact-check’ sites who downplay new taxes as a result of the Patient Protection and Affordable Care Act tax bill [Obamacare]. More taxes are headed your way, and other than hikes, one likely result is stagnant wages. The fact-checkers will mince words and do everything possible to mislead you on this.
Rather than translate the arcane language in the bill the majority of Democrats who passed it did not read, I lifted excerpts directly from the Congressional Budget Office Budget and Economic Outlook: 2014-2024 report. Beneath each section, I added commentary. I added bold type in an attempt to make this reader-friendly.
“Tax on Health Insurance Providers: Under the Affordable Care Act, health insurers are subject to a new excise tax starting this year. The law specifies the total amount of tax to be assessed, and that total will be divided among insurers according to their share of total premiums charged. However, several categories of health insurers (such as self-insured plans, federal and state governments, and tax-exempt providers) are fully or partially exempt from the tax. Revenues from the tax are projected to total $7 billion in 2014 and rise to $18 billion by 2024.”
Comment: When businesses face increases in taxes, the hikes are often passed to consumers. Insurers who are public corporations will likely be forced to pass the hikes along to you.
“Other Excise Taxes: Other excise taxes are projected to generate a total of about $9 billion in revenues this year and $130 billion in revenues between 2015 and 2024. About three-quarters of that $130 billion stems from three charges instituted by the Affordable Care Act, each of which is estimated to yield excise tax revenue of about $31 billion over the 2015–2024 period: an annual fee charged on manufacturers and importers of brand-name drugs; a 2.3 percent tax on manufacturers and importers of certain medical devices; and a tax, beginning in 2018, on certain high-cost employment-based health insurance plans.”
Comment: Those annual fees on devices and drugs will likely be passed back to consumers. The “high-cost” plans will probably impact unionized workers more than others. President Barack Obama delayed the tax after unions, a core constituency for Democrats, asked him to. Unions lobbied for the healthcare bill to pass.
“Miscellaneous Fees and Fines: Miscellaneous fees and fines totaled $26 billion in 2013 (or just under 0.2 percent of GDP) and will total $27 billion in 2014 under current law, CBO projects. After 2014, those receipts will rise substantially (again, under current law), mainly because of provisions of the AffordableCare Act. The receipts in that category include penalties on employers that do not provide health insurance and fees paid to the government as part of the risk adjustment process for insurers under that act; according to that process, health insurance plans whose enrollees are expected to have below-average health care costs are required to make payments to the government, which distributes those sums to plans whose enrollees are expected to have above-average health care costs.
After 2014, miscellaneous fees and fines will total about 0.3 percent of GDP, according to CBO’s projections.”
Comment: The bill’s effect is to tax those of us who live in areas where healthcare costs are lower and hand over the savings to those who live in areas where healthcare costs are higher, such as states where the cost of living is higher. The fact that fees and fines are expected to total about 0.3 percent of GDP should be a wakeup call to all because once the federal bureaucracy seizes your money, it is not likely you will get it back.
Of all the presidential candidates on both sides of the aisle, Sen. Ted Cruz has spoken out about this damaging bill more decisively in hopes of warning Americans. Republican leaders criticized Cruz for his efforts to tell Americans the truth.
Other than the CBO report, you can read more about these tax hikes at The Daily Caller Foundation and Forbes. Bear in mind a corporation cannot deduct expenses associated with an excise tax. Also bear in mind the Cadillac Tax will encourage some employers to decrease employees’ coverage.
There is also a tax for not obeying the diktat to purchase government-approved health insurance from a government-selected group. That tax increases dramatically for 2015.
Full implementation of the bill will not be accomplished until after Obama leaves office.
In the first GOP debate, no moderator asked questions about the tax hikes although a private sector consultant hired by the Obama administration to help craft the bill admitted he couldn’t gauge the impacts of the bill.
Obviously those who report no income or who are able to decrease their income by using tax deductions will fare better under this bill. Employers may attempt to deal with it by using part-time workers instead of fulltime workers they would be required to insure.
(Commentary by Kay B. Day/Aug. 10, 2015)
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