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.
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
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
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
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
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.
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