Obamacare wins: Now the pain begins – Pacific Research Institute

Obamacare wins: Now the pain begins

With the passage of the health “reform” bill, President Obama,

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid have

ensured that the American economy and America’s household economics are

in for a rough decade.

Liberals are hailing the vote as

historic, and indeed it was — a blunder of major portions that

accomplishes none of the original goals on which health-care reform was

sold. It doesn’t come close to providing universal insurance and bends

the cost curve up, not down.

It expands Medicaid, cuts

Medicare and adds billions of dollars in new taxes and mandates just as

these monies are needed to put Americans to work.

The most

remarkable immediate result of the vote is, well, nothing much at all.

Next year is already slated to be a tough year for Americans, as the

expiration of the Bush tax cuts promises to suck billions from the

private sector. Now ObamaCare’s mandates will increase health spending

by businesses and households — with more “health-reform” tax hikes set

to hit in the years ahead.

That’s not to say there will be no

short-term effects. The bill immediately redefines youth to age 26,

mandating that group and individual health plans cover adult “children”

up to that age. This will certainly increase premiums, as will the new

law’s ban on policies that have lifetime and annual limits on

health-care services.

Americans will also start to pick up a

portion of the $20 billion in tax hikes imposed on medical-device

companies, as well the new taxes on drug manufacturers. And we’ll no

longer be allowed to buy over-the-counter medications with our

flexible-spending accounts.

But the most onerous of the bill’s

taxes start to take effect in 2013. Families with incomes greater than

$250,000 will pay a higher Medicare Payroll Tax up to 2.35 percent,

plus a new 3.8 percent tax on interest and dividend income. With this

stroke, Democrats have managed to punish both work and the savings of

American families.

Congress radically cuts the annual

contribution to flexible health-care spending accounts from $5,000 to

$2,500 and limits deductions of catastrophic health-care expenses. Both

moves promise hardship for families that face costly, chronic medical

conditions. Half of those who take advantage of the medical-expense

deduction earn less that $50,000 a year.

By 2014, the new law

will certainly put the health-insurance market in full crisis. That’s

the year insurers will have to offer polices to all comers — charging

healthy people the same premiums as those who waited until they were

sick to buy a policy.

That reform has devastated the

private-insurance market in every state that has adopted it — pushing

premiums so high that more than half of individual and small-group

policyholders drop their insurance altogether. These people will have

nowhere to get except the federally created and subsidized “insurance


Meanwhile, fines of $2,000 per employee will fall

on businesses with 50 or more workers if any employee gets a subsidy

from the federal government.

Starting in 2018, “Cadillac”

insurance plans will be taxed — individual polices over $10,200 a year

and family plans over $27,500. The way the tax is “indexed,” in time

it’ll cover more and more Americans — just as the Alternative Minimum

Income Tax, first targeted at the super-rich, now hits millions in the

middle class.

The individual mandate is laughably weak, with

fines starting at one-half of 1 percent of income in 2014 and topping

out at 2 percent in 2016. Many Americans will game the system, paying

the fine until a major health expense hits, and then buying insurance

at government-mandated rates as if they were healthy.

It is

clear from the polls that 56 percent of Americans don’t want the

government to take over their health care. But Obama, Pelosi and Reid

don’t care: They believe that government should be bigger and is better

able to make decisions than individuals about how to run their lives.

There’s no doubt that under this plan, taxes for all Americans will go

up, deficits will climb, care will be rationed and all of us will be on

their way to living under a government-run system of “Medicaid for


Sally Pipes is president and CEO of the Pacific

Research Institute. Her latest book is “The Top Ten Myths of American

Health Care.”

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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