Repealing, replacing or restructuring the ACA is super complex, and as you can now see, the Republicans are struggling mightily to come up with a bill that will pass through the House and the Senate (Don’t kid yourself: Trump will sign anything they put in front of him — his assurances to the contrary are meaningless).
So it’s hard for the average person to understand all the moving parts, and to a significant extent, that plays into the hands of the Republicans. Because make no mistake: the driving factor in repealing Obamacare is repealing the taxes that are funding it, most of which are on the very wealthy. What a surprise!
So Progressives need to focus and simplify their opposition to whatever plan the Republicans propose, because those tax cuts will be sacrosanct, and without those taxes, the Republican bill will result in people losing coverage, especially Medicaid, as well as higher premiums and deductibles, and a reduction of the number of insurers willing to even offer plans for individuals, not because they are heartless, but because they won’t be able to design an insurance policy that generates enough premiums to pay for all the claims without those premiums going through the roof.
So here’s the thing to get into your head: It’s the Tax Cuts on the Wealthy, Stupid! (No disrespect intended ;)
Here’s a summary of the annual taxes that support the provisions of the Affordable Care Act and the funding they provide, courtesy of Americans for Tax Reform:
$123 Billion: Surtax on Investment Income (Takes effect Jan. 2013): A new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single).
$86 Billion: Hike in Medicare Payroll Tax (Takes effect Jan. 2013): Current law and changes:
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|
First $200,000
($250,000 Married)
Employer/Employee
|
All Remaining Wages
Employer/Employee
|
|
Current Law
|
1.45%/1.45%
2.9% self-employed
|
1.45%/1.45%
2.9% self-employed
|
|
Obamacare Tax Hike
|
1.45%/1.45%
2.9% self-employed
|
1.45%/2.35%
3.8% self-employed
|
$65 Billion: Individual Mandate Excise Tax and Employer Mandate Tax (Both taxes take effect Jan. 2014):
Individual: Anyone not buying “qualifying” health insurance as defined by Obama-appointed HHS bureaucrats must pay an income surtax according to the higher of the following
|
|
1 Adult
|
2 Adults
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3+ Adults
|
|
2014
|
1% AGI/$95
|
1% AGI/$190
|
1% AGI/$285
|
|
2015
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2% AGI/$325
|
2% AGI/$650
|
2% AGI/$975
|
|
2016 +
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2.5% AGI/$695
|
2.5% AGI/$1390
|
2.5% AGI/$2085
|
Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS). Bill: PPACA; Page: 317-337
Employer: If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees. Applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer).
$60.1 Billion: Tax on Health Insurers (Takes effect Jan. 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. Phases in gradually until 2018. Fully-imposed on firms with $50 million in profits.
$32 Billion: Excise Tax on Comprehensive Health Insurance Plans (Takes effect Jan. 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions. CPI +1 percentage point indexed.
$23.6 Billion: “Black liquor” tax hike (Took effect in 2010) This is a tax increase on a type of bio-fuel. Bill: Reconciliation Act; Page: 105
$22.2 Billion: Tax on Innovator Drug Companies (Took effect in 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year.
$20 Billion: Tax on Medical Device Manufacturers (Takes effect Jan. 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax. Exempts items retailing for <$100.
$15.2 Billion: High Medical Bills Tax (Takes effect Jan 1. 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only. Bill: PPACA; Page: 1,994-1,995
$13.2 Billion: Flexible Spending Account Cap – aka “Special Needs Kids Tax” (Takes effect Jan. 2013): Imposes cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center(link is external)) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.
$5 Billion: Medicine Cabinet Tax (Took effect Jan. 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
$4.5 Billion: Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D (Takes effect Jan. 2013)
$4.5 Billion: Codification of the “economic substance doctrine” (Took effect in 2010): This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed.
$2.7 Billion: Tax on Indoor Tanning Services (Took effect July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons.
$1.4 Billion: HSA Withdrawal Tax Hike (Took effect Jan. 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
$0.6 Billion: $500,000 Annual Executive Compensation Limit for Health Insurance Executives
$0.4 Billion: Blue Cross/Blue Shield Tax Hike (Took effect in 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services. Bill: PPACA; Page: 2,004
* * *
Bottom line: Keep your eyes on the tax cuts for the wealthy, and oppose them with all your might!
