“A group of gay Republicans called GOProud has endorsed Mitt Romney. There was some confusion. When they heard Romney had a reputation for going either way, they didn’t know that meant flip-flopping.” –Jay Leno
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Despite GOP Scare Tactics, Most People Will Not Pay More In Taxes Under Affordable Care Act
July 5, 2012 — Ron ChusidMitt Romney might not be able to decide if the mandate is a tax or penalty, but for the most part Republicans are resorting to false claims about taxes in the Affordable Care Act to continue to scare and mislead voters. The tax penalty in the mandate only affects two percent of the population, and overall the ACA is certainly not the largest tax increase in history as conservatives claim. It is far less than the Reagan tax increase of 1982, and few will actually wind up paying more in taxes.
Overall, Obama’s health-care law will increase federal revenues as a portion of gross domestic product. The nonpartisan Congressional Budget Office estimates that the law will reduce federal deficits by a relatively small amount—$210 billion, by 2021.
Here’s a nice chart from Ezra Klein which breaks down how the tax increases in Obamacare stack up against tax hikes passed by previous administrations. You can see that Obama’s tax increase will bring in less revenue as a portion of GDP than the tax increases put in place by presidents George H.W. Bush, Bill Clinton, or Ronald Reagan.
Lots of different tax hikes are tucked into the Affordable Care Act. If you’re a tanning salon, a medical device maker, a pharmaceutical company, a small business owner who doesn’t want to provide health insurance coverage to your employees, or an individual who refuses coverage, you’re going to have to cough up more money to the IRS in the form of penalties, fees, and yes, taxes. Individuals earning $200,000 or above and couples earning at least $250,000 will pay a 0.9% Medicare surtax and a 3.8% surtax on investment income. Some of these taxes—such as the 2.3 percent excise tax on the sale of medical devices—could be passed along to consumers.
If you’re just about anyone else, the health-care law is likely to be a net plus. People who earn up to 133 percent of the poverty line will become eligible for Medicaid. Families earning up to 400 percent of the poverty line—about $100,000—also get lots of subsidies for insurance on state-run exchanges whose goal is to bring down the cost of care.
Republicans such as House Speaker John Boehner (R.-Ohio) have been particularly keen on bringing up small business, arguing that Obamacare amounts to a tax hike for them. If you’re a business with up to 25 employees, you’re also going to get a big tax credit to help with your employees’ health-care bill. After 2014, that credit will cover up to 50 percent of employer contributions.
Taken together, claims that Obamacare amounts to the largest tax hike in the entire history of humanity—or even the last 20 years—don’t add up.
The Affordable Care Act is especially beneficial in promoting small business. A small percentage of small business owners make enough to be subject to the higher taxes while many will receive tax breaks to provide coverage for employees. This will help small businesses compete for employees, being able to offer coverage comparable to larger companies, along with helping business owners. Having health insurance become portable will also allow more people to leave larger companies to either work for small businesses or start businesses of their own.
Expanding Medicaid
July 4, 2012 — Ron ChusidAlthough ten Republican governors have pledged not to accept the Medicaid expansion funds in the Affordable Care Act and 22 other governors are also considering turning down the money, Think Progress explains how these funds save money for the states:
1. Under Obamacare, states no longer have to finance health insurance for people above 133 percent of the federal poverty level. Many states fund health insurance programs which cover residents living at more than 133 percent of the federal poverty level (FPL). Obamacare makes residents at higher than 133 percent of the FPL eligible for subsidized health insurance through state insurance exchanges at no cost to states. For example, Idaho would no longer have to fund health insurance for its 63 percent of uninsured residents who are above 133 percent of the FPL, reducing its $47 million annual uncompensated care cost to $17.3 million.
2. Under Obamacare, states pay billions less to cover people below 133 percent of the federal poverty level. States pay billions in health insurance programs for residents living at less than 133 percent of the FPL. After five years of Obamacare, the federal government will cover 90 percent of insurance costs for state residents making less than 133 percent of the FPL. For the first three years of the expanded Medicaid program, the federal government will cover 100 percent of Medicaid costs. The surveyed states will save $4.2 billion (100 percent of their uncompensated care costs) annually for the first three years, and $3.0 billion annually starting in 2019. For example, Michigan pays $212 million annually in uncompensated care costs. After five years of Obamacare, Michigan would have to pay only $68 million annually in the expanded Medicaid program.
3. By making health insurance universally available, Obamacare slashes the “hidden tax” states pay in health insurance premiums. States pay a “hidden tax” in the form of higher insurance premiums to account for the cost of covering the uninsured. “By greatly reducing uncompensated care,” the Council explains, Obamacare works to “reduce this hidden tax.” For example, North Carolina would see its annual $58.6 million insurance premium “tax” reduced to reflect a much smaller number of people without health insurance.
A modern industrialized nation should really be able to do even more for the working poor than to place them on Medicaid. I wish that the entire idea of expanding Medicaid would disappear and instead there was more money to assist more people in purchasing real insurance through the exchanges (perhaps made more economical with a public option). At least the Affordable Care Act also increases payment for primary care services temporarily, but unless this is made permanent those on Medicaid will continue to receive second class care. It is unrealistic to expect physicians to see more Medicaid patients at a loss.
Unfortunately at present expanding Medicaid is the most likely means of extending health care to the working poor. Ultimately I expect that most red states will give in and take the federal funds to provide this coverage, but many people might continue to suffer until this happens.
Quote of the Day
July 2, 2012 — Ron Chusid“President Obama has a new ad that hits Mitt Romney’s business career by calling him an ‘outsourcer-in-chief.’ Romney responded with an ad of his own — made by an excellent company in India.” –Jimmy Fallon
