Ten Tax Increases of Obamacare
By Avik Roy, in National Review, Oct. 5, 2010
http://www.nationalreview.com/critical-condition/248846/ten-tax-increases-obamacare-avik-roy
Bob Vineyard of InsureBlog calls our attention to a piece in the Kiplinger letters on “thirteen tax changes on the way” due to PPACA (the Patient Protection and Affordable Care Act, also known as “Obamacare”). Describing them as “changes” is charmingly sunny, given that only two of the changes are tax credits―a fancy term for subsidies―whereas ten are tax increases: levies intended to help raise the trillions of dollars necessary to fund these very tax credits, along with the law’s massive expansion of Medicaid. (One of the changes Kiplinger lists is technically neither a tax increase nor a credit, but is designed to enhance enforcement of the tax increases. More on that later.)
In keeping with the spirit with which PPACA was written, let’s focus first on dessert (the subsidies) and then the spinach (the increases). Employers with 25 or fewer employees and average annual wages less than $50,000 are eligible for tax credits for up to 35 percent of their health insurance costs through 2013; for 2014 and 2015, these firms can gain a credit of up to 50 percent of their insurance costs if they enroll in the PPACA-sponsored state-based exchanges. The other tax credit listed by Kiplinger is more directly a subsidy: available on a sliding scale to individuals with incomes between $11,000 and $44,000 ($22,000 and $88,000 for families), for purchasing health insurance.
Here are the ten tax increases:
1. A 10% excise tax on indoor tanning services (a boon to beach towns everywhere).
2. Elimination of the tax deduction for employers providing Medicare prescription drug coverage. (This is a big part of why companies like 3M are dropping health coverage for their retirees.)
3. Doubling the penalty for spending money from your tax-free health savings account for non-health-related purposes (as defined by PPACA), to 20%.
4. Capping the amount that employers can contribute to your tax-free flexible spending accounts (employer-sponsored HSAs), at $2,500 a year (it was previously limited by your employer’s generosity).
5. Banning the use of funds from HSAs and related accounts for the purchase of over-the-counter medications (now you will have to go to your doctor and get a prescription, a waste of precious health-care resources and doctors’ time).
6. A 0.9% Medicare surtax to wages over $200,000 for individuals and $250,000 for married couples, along with a 3.8% Medicare tax on investment income of these individuals. (The 3.8% tax will actually apply to the lesser of unearned income or any excess income above $200,000/$250,000.) Because this tax is applied to pre-tax income, these taxes are equivalent to income tax rate increases of 2 percent and 8 percent respectively.
7. The ability to deduct itemized medical expenses will begin after you spend 10% of your income on medical expenses, instead of 7.5%.
8. The employer mandate, which requires that all business with more than 50 employees offer PPACA-approved health plans to all of their employees, or pay a tax of $2,000 per employee, excluding the first 30 employees.
9. The “Cadillac tax” on high-value health plans: beginning in 2018, plans costing more than $10,200 for individuals, or $27,500 for families, will be assessed a 40 percent excise tax. Insofar as this tax mimics the elimination of the employer tax exclusion , it is the least offensive of Obamacare’s tax increases, but unfortunately that policy goal―harmonizing the tax treatment of individually-purchased and employer-sponsored health insurance―is neutered by the employer mandate described above.
10. And last, but not least: the individual mandate, which requires everyone to purchase health insurance, or pay a tax: it starts in 2014 at $95 or 1% of gross income, whichever is greater; and maxes out in 2016 at the greater of $695 or 2.5% of income.
Importantly, Kiplinger’s run-down overlooks PPACA’s numerous tax increases on health care businesses, as well as its thousands of mandates that will increase the cost of health care and labor, all of which will be passed down to consumers in the form of higher costs for everything from cancer drugs to Big Macs.
For example, the $2.5 billion excise tax on pharmaceutical companies will simply get passed onto consumers: companies will charge $7-8 billion more for their products, in order to recover the income lost to the excise tax. Similar taxes on medical devices and health insurance will be passed onto consumers. And whether your local McDonald’s franchise chooses to offer generous health insurance to all of its employees, or instead pays the new tax for failing to do so, the cost of your Happy Meal is going up.
Kiplinger’s 13th “change” is genuinely a change: employers will now be required to disclose on your W-2s the amount they spend on your health insurance, so as to ensure enforcement of the individual mandate, the employer mandate, and the Cadillac tax.
There’s another change that Kiplinger neglects to mention, but that Bob Vineyard does: the requirement that businesses fill out an IRS Form 1099 every time they spend more than $600 on a single vendor in a calendar year. The increased compliance burdens associated with this rule are staggering, and once again will drive up the cost of everything you buy. As Bob Vineyard puts it:
Business owners are required to generate a 1099 for any vendor where they purchase more than $600 in goods or services. That means if you own a business and buy more than $600 in gasoline, electricity, telephone, internet, cell phone, natural gas or water you must generate a 1099 for those businesses. Buy more than $600 from Office Depot or Staples?
Generate a 1099.
Do you pay a cleaning service to empty the trash in your business? Pay a landscaper? Provide a coffee service for employees and guests? 1099. 1099, 1099.
It will cost you money to generate those 1099′s. Money that could have been used to create jobs.
Advocates of PPACA truly believed that Obamacare would become more popular as people came to appreciate the ways in which the law directly benefited them. But P. J. O’Rourke’s immortal aphorism can’t be too often repeated: “If you think health care is expensive now, wait until it’s free.”
Showing posts with label federal health overhaul. Show all posts
Showing posts with label federal health overhaul. Show all posts
Friday, October 8, 2010
Saturday, September 11, 2010
GAO Finds Sebelius Misleading Taxpayers on Health Reform
For those on Medicare or have family and friends on Medicare, please read! Make sure you link to the article, referenced links and the GAO report B-319834, September 9, 2010.
September 10, 2010 11:04
GAO Finds Sebelius Misleading Taxpayers on Health Reform
by Elizabeth MacDonald
The Government Accountability Office says a Medicare mailer sent out by Kathleen Sebelius, secretary of Health and Human Services, to Medicare recipients on the new health-care law isn’t accurate.
In fact, according to the GAO, the brochure, which cost $18 million in taxpayer dollars to publish and emanated from the Centers for Medicare and Medicaid Services, presented a view of the health reform law that is “not universally shared,” that it “overstated the benefits” of health reform,” and that it failed to note the possibility of less generous Medicare benefits and higher costs.
While the GAO cleared the administration of putting together a purely partisan or propagandizing brochure, it was nonetheless critical of its content.
Is this Sebelius brochure good use of nearly $20 million in taxpayer money?
Prior to press, Fox Business reached out to HHS for its response to the GAO report. After the story appeared on the FBN website, HHS emailed this statement: "The GAO report confirms what we have been saying all along. The Medicare brochure is a critical tool to inform Medicare beneficiaries and their families about how the Affordable Care Act affects them." The statement concludes by saying that the GAO report "confirms that it [the brochure] is not partisan and is not propaganda."
The irony is rich. Almost a year to the day, Humana, one of the biggest private insurers offering richer Medicare plans to the elderly, sent out a letter last September warning senior citizens that a government revamp of health insurance could eliminate their benefits.
An official with a unit of the Centers for Medicare and Medicaid Services then sent the insurer a threatening letter instructing Humana that it was now under investigation, that it must “end immediately all such mailings to beneficiaries” and that it must “remove any related materials” from its website, adding, “please be advised that we take this matter very seriously and, based upon the findings of our investigation, will pursue compliance and enforcement actions.”
That letter set off an explosive fight in Congress, with Democrats Sen. Max Baucus and House Speaker Nancy Pelosi on the one side and Senate Minority leader Mitch McConnell on the other.
Representatives David Camp (R-Mich.) and Wally Herger (R-Calif.) had asked the GAO to determine whether the HHS brochure violated publicity or propaganda prohibitions in federal law.
In the brochure, Kathleen Sebelius, secretary of Health and Human Services, says the handout provides taxpayers with “accurate” information about “new services and benefits” under health reform.
Specifically, in a section entitled "What Stays the Same," Sebelius advises taxpayers that "[t]he guaranteed Medicare benefits you currently receive will remain the same,” that reform “preserves and strengthens Medicare," makes "improvements," and creates "new benefits."
But the GAO says those statements are misleading and are overstatements.
For example, the GAO says the brochure fails to note that reform actually delivers cuts to the Medicare program, increases Medicare prescription premiums, and cuts payment to doctors.
The GAO also says the Sebelius brochure made misleading statements about health reform making “improvements” to Medicare Advantage, and that the brochure does not cite the $123 billion in estimated cuts over a ten-year period to Medicare Advantage, which provides services beyond regular Medicare offerings. Medicare Advantage is the private options that about one in five Medicare beneficiaries enroll in.
And the GAO says the brochure fails to note that “two government analyses have determined that [health reform] reductions in funding for Medicare Advantage may decrease enrollment and result in less generous benefit packages.”
The GAO also says the brochure misleadingly tells Medicare recipients that health reform "increases the number of primary care doctors, nurses, and physician assistants" enrolled in Medicare, when in fact, reform only provides incentives for those doctors to voluntarily join or stay in Medicare.
The GAO also says the brochure misleadingly refers to new programs as being available for Medicare recipients, when they are not eligible for these offerings.
A spokesman for the GAO says the report "confirms what we have been saying all along. The Medicare brochure is a critical tool to inform Medicare beneficiaries and their families about how the Affordable Care Act affects them and remind them to be on the alert for any scams asking for personal information. Today's GAO report confirms that it is not partisan and is not propaganda."
In a section called “Improvements beyond Medicare that you and your family can count on,” Sebelius’s brochure notes that under the new health reform law, children up to age 26 can stay on their parents plan. But the GAO says that section is misleading, as Medicare beneficiaries “are likely to be ineligible” for that offering, meaning, their children can’t get Medicare benefits.
And in that same section, the Sebelius brochure also cites a new long-term care insurance program that requires enrollees to work while paying premiums. But the GAO says that, again, Medicare beneficiaries “are likely to be ineligible” for that offering.
The GAO also says the brochure fails to acknowledge what the 2010 Medicare Trustees Report says, “that while the financial outlook for the Medicare program is substantially improved as a result of” reform, “the feasibility of long-range improvements is still uncertain, and significant increases in premiums for some beneficiaries may be necessary.”
The Sebelius brochure also states that reform will "ensure accountability throughout the health care system,” but the GAO report says it “does not guarantee it.”
Similarly, the brochure notes that health reform "reduces payment errors, waste, fraud, and abuse,” but again the GAO says those reductions are not guaranteed.
And the GAO says the brochure makes other “overstatements of information” on health reform, including that "[i]nsurance companies will be prohibited from denying coverage due to a pre-existing condition for children starting in September, and for adults in 2014," when in fact the new law “does not apply to all health plans,” and that “a subset of health plans-grandfathered individual health insurance plans-are exempt” from restrictions on denying coverage for pre-existing conditions.
http://emac.blogs.foxbusiness.com/2010/09/10/gao-finds-sebelius-misleading-taxpayers-health-reform#ixzz0zHBBeNyK
September 10, 2010 11:04
GAO Finds Sebelius Misleading Taxpayers on Health Reform
by Elizabeth MacDonald
The Government Accountability Office says a Medicare mailer sent out by Kathleen Sebelius, secretary of Health and Human Services, to Medicare recipients on the new health-care law isn’t accurate.
In fact, according to the GAO, the brochure, which cost $18 million in taxpayer dollars to publish and emanated from the Centers for Medicare and Medicaid Services, presented a view of the health reform law that is “not universally shared,” that it “overstated the benefits” of health reform,” and that it failed to note the possibility of less generous Medicare benefits and higher costs.
While the GAO cleared the administration of putting together a purely partisan or propagandizing brochure, it was nonetheless critical of its content.
Is this Sebelius brochure good use of nearly $20 million in taxpayer money?
Prior to press, Fox Business reached out to HHS for its response to the GAO report. After the story appeared on the FBN website, HHS emailed this statement: "The GAO report confirms what we have been saying all along. The Medicare brochure is a critical tool to inform Medicare beneficiaries and their families about how the Affordable Care Act affects them." The statement concludes by saying that the GAO report "confirms that it [the brochure] is not partisan and is not propaganda."
The irony is rich. Almost a year to the day, Humana, one of the biggest private insurers offering richer Medicare plans to the elderly, sent out a letter last September warning senior citizens that a government revamp of health insurance could eliminate their benefits.
An official with a unit of the Centers for Medicare and Medicaid Services then sent the insurer a threatening letter instructing Humana that it was now under investigation, that it must “end immediately all such mailings to beneficiaries” and that it must “remove any related materials” from its website, adding, “please be advised that we take this matter very seriously and, based upon the findings of our investigation, will pursue compliance and enforcement actions.”
That letter set off an explosive fight in Congress, with Democrats Sen. Max Baucus and House Speaker Nancy Pelosi on the one side and Senate Minority leader Mitch McConnell on the other.
Representatives David Camp (R-Mich.) and Wally Herger (R-Calif.) had asked the GAO to determine whether the HHS brochure violated publicity or propaganda prohibitions in federal law.
In the brochure, Kathleen Sebelius, secretary of Health and Human Services, says the handout provides taxpayers with “accurate” information about “new services and benefits” under health reform.
Specifically, in a section entitled "What Stays the Same," Sebelius advises taxpayers that "[t]he guaranteed Medicare benefits you currently receive will remain the same,” that reform “preserves and strengthens Medicare," makes "improvements," and creates "new benefits."
But the GAO says those statements are misleading and are overstatements.
For example, the GAO says the brochure fails to note that reform actually delivers cuts to the Medicare program, increases Medicare prescription premiums, and cuts payment to doctors.
The GAO also says the Sebelius brochure made misleading statements about health reform making “improvements” to Medicare Advantage, and that the brochure does not cite the $123 billion in estimated cuts over a ten-year period to Medicare Advantage, which provides services beyond regular Medicare offerings. Medicare Advantage is the private options that about one in five Medicare beneficiaries enroll in.
And the GAO says the brochure fails to note that “two government analyses have determined that [health reform] reductions in funding for Medicare Advantage may decrease enrollment and result in less generous benefit packages.”
The GAO also says the brochure misleadingly tells Medicare recipients that health reform "increases the number of primary care doctors, nurses, and physician assistants" enrolled in Medicare, when in fact, reform only provides incentives for those doctors to voluntarily join or stay in Medicare.
The GAO also says the brochure misleadingly refers to new programs as being available for Medicare recipients, when they are not eligible for these offerings.
A spokesman for the GAO says the report "confirms what we have been saying all along. The Medicare brochure is a critical tool to inform Medicare beneficiaries and their families about how the Affordable Care Act affects them and remind them to be on the alert for any scams asking for personal information. Today's GAO report confirms that it is not partisan and is not propaganda."
In a section called “Improvements beyond Medicare that you and your family can count on,” Sebelius’s brochure notes that under the new health reform law, children up to age 26 can stay on their parents plan. But the GAO says that section is misleading, as Medicare beneficiaries “are likely to be ineligible” for that offering, meaning, their children can’t get Medicare benefits.
And in that same section, the Sebelius brochure also cites a new long-term care insurance program that requires enrollees to work while paying premiums. But the GAO says that, again, Medicare beneficiaries “are likely to be ineligible” for that offering.
The GAO also says the brochure fails to acknowledge what the 2010 Medicare Trustees Report says, “that while the financial outlook for the Medicare program is substantially improved as a result of” reform, “the feasibility of long-range improvements is still uncertain, and significant increases in premiums for some beneficiaries may be necessary.”
The Sebelius brochure also states that reform will "ensure accountability throughout the health care system,” but the GAO report says it “does not guarantee it.”
Similarly, the brochure notes that health reform "reduces payment errors, waste, fraud, and abuse,” but again the GAO says those reductions are not guaranteed.
And the GAO says the brochure makes other “overstatements of information” on health reform, including that "[i]nsurance companies will be prohibited from denying coverage due to a pre-existing condition for children starting in September, and for adults in 2014," when in fact the new law “does not apply to all health plans,” and that “a subset of health plans-grandfathered individual health insurance plans-are exempt” from restrictions on denying coverage for pre-existing conditions.
http://emac.blogs.foxbusiness.com/2010/09/10/gao-finds-sebelius-misleading-taxpayers-health-reform#ixzz0zHBBeNyK
Friday, September 10, 2010
Thursday, September 9, 2010
John Hood's Daily Journal
Destruction Plan on Schedule
By John Hood
September 09, 2010
RALEIGH – While left-wing advocates of nationalized health care weren’t pleased when Congress stripped a Medicare-like universal “option” out of the ObamaCare legislation, they fought for passage of the bill nonetheless – recognizing that its provisions would hasten nationalization in the long run, even if it didn’t accomplish the objective in the short run.
They understood, far better than the gullible journalists and politicians who took the administration’s rhetoric about “cost savings” at face value, that the new taxes and regulations in the bill would work to unravel the individual and small-group markets for health insurance, thus stopping the spread of consumer-driven health care.
They further understood that there are only two ways to reduce health care spending: government rationing from above or more efficient consumption from below. They favor government rationing. So does their hero, Donald Berwick, whom President Obama just installed as his top health care official via recess appointment.
Berwick wants the United States to mimic the approach of Great Britain and other countries that use explicit rationing to carry out central planning of medical care. He says he is “romantic” about such policies, which favor “standardization to the best-known method” over “clinicians’ autonomy as a rule for care.” In other words, government officials get to decide who consumes what medical services – not doctors and their patients.
As for the other option – consumer-driven health care based on patient incentives and competition – Berwick has nothing but disdain. “In the United States,” he says, “competition is a major reason for our duplicative, supply-driven, fragmented care system.”
Hostile to the philosophical assumptions of consumer-driven health care, and bewildered by its early successes, the Left seeks to use ObamaCare to destroy it with two lines of attack:
• First, the new benefit mandates under ObamaCare will raise the cost of private health plans, particularly in the individual and small-group markets where consumer-driven health care already serves millions of Americans. These costs are already going up in the coming year for plans sold by Aetna, Blue Cross, and other insurers active in these markets. About half of the 18 percent hike Celtic Insurance is seeking for its North Carolina customers stems from ObamaCare mandates, for example.
• Second, ObamaCare will put the president’s Department of Health and Human Services in the position of deciding whether high-deductible health plans based around health savings accounts will be considered “insurance” for the purpose of complying with the legislation’s individual mandate.
The uncertainty about whether such plans will be illegal after 2014 has already driven some insurers out of the market, reports Health Care News. Unless the law is clarified or repealed, others may well follow, including my own insurance carrier.
Such an outcome would rob me and millions of other Americans of the choice to retain the current health care financing arrangements we prefer, contrary to President Obama’s oft-repeated promise. For the Left, however, this is a feature of the plan, not a defect.
Hood is president of the John Locke Foundation.
http://www.carolinajournal.com/jhdailyjournal/index.html
By John Hood
September 09, 2010
RALEIGH – While left-wing advocates of nationalized health care weren’t pleased when Congress stripped a Medicare-like universal “option” out of the ObamaCare legislation, they fought for passage of the bill nonetheless – recognizing that its provisions would hasten nationalization in the long run, even if it didn’t accomplish the objective in the short run.
They understood, far better than the gullible journalists and politicians who took the administration’s rhetoric about “cost savings” at face value, that the new taxes and regulations in the bill would work to unravel the individual and small-group markets for health insurance, thus stopping the spread of consumer-driven health care.
They further understood that there are only two ways to reduce health care spending: government rationing from above or more efficient consumption from below. They favor government rationing. So does their hero, Donald Berwick, whom President Obama just installed as his top health care official via recess appointment.
Berwick wants the United States to mimic the approach of Great Britain and other countries that use explicit rationing to carry out central planning of medical care. He says he is “romantic” about such policies, which favor “standardization to the best-known method” over “clinicians’ autonomy as a rule for care.” In other words, government officials get to decide who consumes what medical services – not doctors and their patients.
As for the other option – consumer-driven health care based on patient incentives and competition – Berwick has nothing but disdain. “In the United States,” he says, “competition is a major reason for our duplicative, supply-driven, fragmented care system.”
Hostile to the philosophical assumptions of consumer-driven health care, and bewildered by its early successes, the Left seeks to use ObamaCare to destroy it with two lines of attack:
• First, the new benefit mandates under ObamaCare will raise the cost of private health plans, particularly in the individual and small-group markets where consumer-driven health care already serves millions of Americans. These costs are already going up in the coming year for plans sold by Aetna, Blue Cross, and other insurers active in these markets. About half of the 18 percent hike Celtic Insurance is seeking for its North Carolina customers stems from ObamaCare mandates, for example.
• Second, ObamaCare will put the president’s Department of Health and Human Services in the position of deciding whether high-deductible health plans based around health savings accounts will be considered “insurance” for the purpose of complying with the legislation’s individual mandate.
The uncertainty about whether such plans will be illegal after 2014 has already driven some insurers out of the market, reports Health Care News. Unless the law is clarified or repealed, others may well follow, including my own insurance carrier.
Such an outcome would rob me and millions of other Americans of the choice to retain the current health care financing arrangements we prefer, contrary to President Obama’s oft-repeated promise. For the Left, however, this is a feature of the plan, not a defect.
Hood is president of the John Locke Foundation.
http://www.carolinajournal.com/jhdailyjournal/index.html
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