The Unaffordable Care Act

Febryary 12, 2013

President Obama and members of Congress must have had a good laugh when they named the Patient Protection and Affordable Care Act (ACA), aka ObamaCare.

The idea that a 2,800+ page law that creates 150 new regulatory boards would reduce the cost of anything is ludicrous.  The ACA will increase the cost of healthcare in a big way.

Premiums will increase.  According to The Wall Street Journal, “even advocates for the law acknowledge that premiums are going up.”  How much, though, seems like a guess; one study says 19% to 30%, another says 55% to 85%, others give other numbers.

Deficits will increase.  Initially, the ACA cut Medicare funding to help pay for implementing the new law.  Medicare itself is, of course, severely underfunded and is racking up trillions in unfunded liabilities.  Yet the plan called for cutting Medicare funding, just as 77 million baby boomers are beginning to retire.

Now, many of the Medicare cuts have been rescinded and the Congressional Budget Office (CBO) is estimating that increased coverage provided by the ACA will cost $186 billion a year.  Anyone else think the CBO’s being a tad conservative in estimating costs?

Taxes will increase.  Starting this year, taxpayers earning at least $200,000 and married couples earning at least $250,000 are subject to a 0.9 percent hike in payroll taxes and a 3.8 percent tax on investment income to subsidize the ACA.

A new fee on drug companies was created and another on health insurers will take effect as implementation of the ACA continues.  In addition, a 2.3 percent tax on medical device manufacturers began this year.

If the goal of the ACA is to improve healthcare, why would we make the medical device industry less competitive?

If improving healthcare is a goal, you’d also think the ACA would encourage plans to provide better-than-average coverage.  Yet, beginning in 2018, the government will impose a 40% tax on premiums that exceed a price threshold ($10,200 a year for single coverage and $27,500 for family coverage).

Given that the threshold is based on price, it will affect small businesses, which pay more for health insurance because they represent higher risk.

Union members with “Cadillac” plans can take heart, though.  In an example of what the Obama Administration considers “fairness,” they’re exempt from the tax.

Finally, beginning next year anyone who is not insured by an employer and who fails to buy health insurance will pay a tax of $95 a year or up to 1% of income, whichever is greater.  The tax increases to $325 or 2% of income in 2015 and $695 or 2.5% of income in 2016, after which it is indexed to inflation.  You may be thinking, “That sounds like a penalty, not a tax,” but the U.S. Supreme Court says otherwise.

Of course, millions of Americans are likely to pay the tax, so they can remain uninsured.  Then, once they get sick, they can buy health insurance, since insurers will be required to sell it to them.  A survey of Fortune 100 companies found that if top employers stopped offering health insurance and instead paid the tax for not doing so, they could save $28.6 billion in 2014 alone.

So what’s so affordable about the Affordable Care Act?

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