Vail Daily column: Something you may not know about Obamacare
July 13, 2017
Editor's note: Find a cited version of this column at http://www.vaildaily.com.
My June 23 letter ("Understanding Obamacare") used an acronym to call out eight benefits of Obamacare. The letter implied many politicians from both parties, even today, could only identify and mutter something about a few of the benefits.
Now, let's tackle the supporting taxes and fees that were set up to make Obamacare "revenue-neutral." In short, the hard, cold tax facts — leaving aside the ideology of government getting involved with health benefits and the health of its population.
Taxes and fees
“Some will say dollars spent on Obamacare taxes are better kept in the hands of individuals and private-sector organizations who will invest it to create more jobs overall and a rising gross domestic product. Others will say dollars spent on Obamacare taxes will create a plethora of medical services-associated jobs and all the Obamacare benefits that leads to a healthier and more productive society.”
• Taxes and fees: 19 and their amounts, forecasted in 2012 as a total going out 10 years by the Congressional Budget Office, as reported in a June 29, 2012, article from Americans for Tax Reform.
1. Surtax on investment income: $123 billion, which took effect in 2013, a 3.8 percent additional tax on capital gains and dividends for households making at least $250,000 per year.
2. Hike on Medicare payroll tax: $86 billion, which took effect in 2013. Higher tax rate on self-employed individuals for any income more than $250,000 (for married folk), going from 1.45 percent to 2.35 percent.
3. Individual mandate excise tax and employer mandate tax: $65 billion, which took effect in 2014. Effectively a penalty on individuals without "qualifying" health insurance and employers with 50 or more employees who do not offer heath insurance, with all sorts of exceptions.
4. Tax on health insurers: $32 billion, which took effect as a phase-in starting in 2014. Fully imposed on companies with $50 million in profits.
5. Excise tax on comprehensive health insurance plans: $32 billion, set to start in 2018, now in 2020. Tax on so-called "Cadillac" health plans provided by employers where the plan is worth more than $10,200 single and $27,500 family, with exceptions and indexed to inflation.
6. "Black liquor" tax: $23.6 billion, which took effect in 2010: Tax on a type of biofuel.
7. Tax on innovator drug companies: $20 billion, which took effect in 2010. Annual taxes and fees on the industry, imposed relative to share of sales made that year.
8. Tax on medical device manufacturers: $20 billion, which took effect in 2010. A 2.3 percent excise tax, with an exception of devices retailing at less than $100.
9. High medical bills tax: $15.2 billion, which took effect in 2013. Raised the medical deduction where you itemize deductibles (versus taking the standard deduction) from 7.5 percent to 10 percent, with an exception for those older than 65.
10. Flexible spending account cap: $13.2 billion, which took effect in 2013. Caps the flexible spending account, where you pay medical bills with tax-exempt dollars, at $2,500 per year, hence the government collects more money.
11 to 19. Relatively small amounts totaling $19 billion, from $5 billion to negligible each, but not necessarily negligible for individuals or organizations affected.
• Data summary: Sixteen of the 19 taxes are in some way associated with health care or health insurance. These 19 Obamacare taxes, intended to make Obamacare revenue-neutral, were originally forecast in 2012 to provide additional revenue to the government of roughly $480 billion throughout 10 years. Best information today has the total going forward for the next 10 years at a minimum of $750 billion. This increase is mostly due to increasing tax amounts from No. 1 above, surtax on investment income, from a rising stock market. One estimate by the Tax Foundation has this one item alone at $628 billion throughout 10 years.
• Going forward: It appears the ballooning Obamacare taxes collected are enough to keep the program revenue-neutral, with considerable excess that could be used for some of today's problems. In fact, there's likely enough excess funding to stabilize the market by providing certain assurances and some short-term financial assistance to insurance companies to not leave states and keep premiums down.
Various suggested marketplace solutions could kick in. They include: 1) selling health insurance across state lines, 2) freedom to buy only the coverage you want and 3) waiting periods before collecting benefits if "continuous coverage" was not in place —analogous to not being able to get flood insurance the day before the flood hits.
But, of course, all of this is not the direction things are going. The current Obamacare repeal and replace in both the now-passed House bill and the first Senate proposal appears to call for the elimination of Obamacare taxes and fees — with the bulk of the savings going to the very wealthy. At this writing, Wednesday, a rumored, second Senate proposal might tinker with some of the tax repeals.
• Summary: So there you have it — this column is an effort for explanation of Obamacare taxes, something that has not been discussed very much. No doubt there are ideological and factual points to be made for how Obamacare taxes have "trickle-down" effects. These effects will be argued both ways.
Some will say dollars spent on Obamacare taxes are better kept in the hands of individuals and private-sector organizations who will invest it to create more jobs overall and a rising gross domestic product. Others will say dollars spent on Obamacare taxes will create a plethora of medical services-associated jobs and all the Obamacare benefits that leads to a healthier and more productive society.
Further, no doubt this letter contains other errors and omissions, but perhaps, it's better than some of the ideological one-liners floating around?
Paul Rondeau is a Vail resident.
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