Obamacare as a Tax

Obamacare as a Tax October 24, 2013


The Supreme Court says that Obamacare is a new tax on Americans.

President Obama agrees.

That is the basis for the Court’s decision to allow the mandates forcing the American people to buy insurance stand. They are not, in the Court’s view, a mandate to purchase a product. They are, rather, a tax on the American people.

Ok then, let’s look at Obamacare as a tax.

Based entirely on what I saw when I went to the website yesterday, this new tax is a hefty one.

Let’s look at the lower end of the income spectrum first. Based on what I saw when I visited the healthcare.gov website, if you have a family of four with two children under the age of 18, and your family income totals less than $35,000 per year, your premium for Obamacare will be somewhere around $1200/year. That comes to a hike in your monthly taxes of about $100/month.

I am using Oklahoma figures for this estimate, and Oklahoma did not set up a health care exchange. It may be better for those in other states. I hope so.

My husband and I had a monthly income even lower than this when our kids were little. We qualified for free and reduced lunches at school. A car with 100,000 miles on it was new to us. My husband did all our auto repairs himself, in the driveway in front of our house. I carefully balanced meals to keep us well fed and the grocery bills do-able. Both my husband and I went without clothes, new glasses (even when we were having trouble seeing) and dental work so the kids could have those things.

I can tell you that an extra $100/month tax hike would have been a big bite for us back then. It would have had to come out of necessity money.

Now, let’s go to the other end. Consider those “wealthy” families of four with two kids under 18 who have a combined family income of $90,000 per year. Housing/automobiles/education/clothing/food/gasoline/etc are all massively more expensive now than they were even a few years ago. If the house hunter shows I watch on HGTV are accurate, home ownership (at least on the coasts) is totally out of sight for the family that makes $35,000/year and barely in sight for the $90,000 earners.

If a simple three bedroom one bath house costs between $200,000 – $300,00 and even a modest new car costs over $20,000 and a community college with the kid living at home costs $4,000-$5,000/year and gasoline hovers around $4/gallon, as does a gallon of milk, then $90,000 only seems rich to those who are barely scraping by.

Add another $6,000 or $7,000 in annual taxes for healthcare that was previously paid for by your employer (this is a bit of conjecture that employers are going to be less inclined to provide health insurance after Obamacare sinks in) and things start looking almost as dicey for these $90,000 earners as it did for my husband and me back in the day.

The point here, at least for me, is that the primary winners in the Obamacare sweepstakes are the insurance companies and a few favored recipients such as Planned Parenthood. In exchange for guaranteed minimum coverage and paying for abortions they get government enforced enrollment in their wares and their premiums become a tax.

I’m not talking here about the serious considerations of cost to the tax payer in terms of government expenditures to underwrite this plan. That is going to come around and bite us in a more indirect, but perhaps more damaging way as time goes by.

I personally think that there were any number of better ways to provide health care for those who didn’t have it. I also do not believe that Obamacare is going to “contain” rising health care costs. I think that, by underwriting them, it will probably turn health care costs into something akin to the defense budget and largesse to corporations — an ever-enlarging pork barrel that devours the treasure of this nation.

Will Obamacare “work?”

Probably. At least somewhat.

I think that it will provide health care insurance for most Americans.

But it is also going to eat into their personal finances. What our elected officials don’t seem to get is that the American people are stretched financially like a piano wire already. They’re having to work more than one job each, just to make ends meet. Every passing year, inflation (which government formulas no longer accurately represent) eats deeper into their already stretched budgets, and every passing year, their incomes stagnate or fall.

Good jobs keep going away. For decades now, the news has been about this or that American corporation leaving this country to go use cheap labor elsewhere to manufacture its wares, which it then sells to the American people.

We are being robbed.

Will Obamacare fix this?

Does it even address it?

No and no.

What it does do is underwrite a medical care system that is deeply flawed and overpriced. It puts insurance companies on the government dole and uses a new direct tax on the American people to pay for that.

I have always believed that this country had to address the need for affordable health care. I am not a neocon. Far from it. I personally know people who forego necessary medical care because of costs. In fact, I have been one of them.

However, this plan is more an accommodation to special interests than a solution for those problems. There is a limit on what the budget of the ordinary American can absorb. I think this plans pushes a lot people painfully close to that limit.

The question, of course, is what Obamacare will look like in years going forward. The tinkering with this plan has not even begun. There is also the question of whether or not it will be repealed by future Congresses.

Personally, I doubt it. Once the plan locks in and the special interests start getting their take, the political will to either repeal or reform Obamacare will vanish like smoke in your morning coffee.

See also: Obamacare Threatens to Hit Many Pocketbooks; Health Care Law Fails to Lower Prices in Rural Areas

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6 responses to “Obamacare as a Tax”

  1. Will Obamacare work? I don’t believe so. Besides it being a finacial blackhole (it cannot sustain itself) the benefits go to a few at the expense of the many, and the expenses are only going to climb as you point out. Future Congress will surely repeal it. Programs of this scale require bi-partesan support, and even independents will be effected negatively by it. The opposition to it is locked in stone and it goes across demographics. The enforcement mechanism requires, of all people, the IRS. It was shoved down our throats and we will shove it right back.

  2. What annoys me most about Obamacare is that it could all have been avoided if Medicare were expanded to include everyone in the country. People already pay Medicare tax if they’re employed, and it seems to me that any increase in that would have been less than they’re talking about in Obamacare. There are parts of Obamacare that are good – keeping kids longer on the parents’ insurance plan and making certain that people with pre-existing conditions aren’t denied insurance or charged millionaire rates to buy insurance. Medicare would need to be tweeked, but given that it already exists and is working well for most of the folks who are in it, that would have been a much more sane and less expensive approach that starting everything from scratch, which is what’s going on now.

  3. I disagree with your premise that “Obamacare will provide insurance…” It provides NOTHING but the (unworkable at this point) opportunity to purchase insurance via a website that does not function. It does not PROVIDE insurance. You BUY the insurance. And probably for the same if not a higher price than you could have purchased such a plan before Obamacare. You see Obamacare now mandates a lot of procedures and services that the majority do not want or need. Instead of buying a policy that works for our family we are forced to subsidized a bunch of “feel good” mandates and thus the cost for everyone increases. Further interfering with the way INSURANCE works…which is to rate and spread risk, Obamacare demands that high risk individuals, high users of medical care are not rated differently than others. Thus the price goes up again. Young males who are very low users of healthcare are seeing huge increases because they are now subsidizing older Americans and females who are higher users.

    As someone who works in healthcare finance, I assure you this entire plan was poorly structured, based on feelings not facts, and is simply a step on the road to total government control of our personal information and personal healthcare decisions. Brave new world Mr Obama has created!

  4. EMS you don’t understand how Medicare “works.” It pays FAR less than regular insurance, has many restrictions and non-paid medical costs and thus doctors are often loathe to accept Medicare patients.Sure we might all have spanking new Medicare cards but we won’t be able to find any doctors!

    Medicare has not been supported by the Medicare tax. Most people take out far more than they ever put in. Further with an INCREASING older population and DECREASING young worker base there will be fewer and fewer to pay the tax. Hence the TAX will become unsustainable as the youngsters may rebel and throw granny off the cliff. Again, Medicare has been ‘supported’ by regular insurance which pays more and by the many charity hospitals that provide billions in uncompensated care.

    What would have worked is LESS interference by government. As someone who works in healthcare finance, who has negotiated numerous contracts and package plans, having the providers working together to provide care to the patient is far less expensive and more important better for the patient than the current food fight over fewer regular insurance patients.

  5. Rebecca, I wonder if you’d be interested in finding out from your readers who don’t have employer-provided health insurance or Medicare how they intend to proceed in this new environment. I am trying to figure out which way to go and would appreciate reading about how others are thinking and acting. I currently buy (expensive, high deductible) insurance privately for me and my children, but the new ACA-compliant Bronze plan offered will cost over 20% more with higher deductibles. I probably qualify for some sort of tax credit on my state’s exchange but am VERY reluctant to entangle myself further with the federal government. I recently learned about a Christian health cost sharing ministry wherein members make monthly “gifts” and then “share” large costs with the group when they come up. It is not insurance but would avoid the ACA penalty. I am not sure yet if this will suit my personal need for security and financial situation. Looking for any wisdom! Thanks.

  6. I’m not a lawyer, but I thought the “tax” recognized by the Supreme Court was the penalty for those who do not purchase insurance; not the premiums for the insurance. So far as I know, the premiums are still “purchase” money, not “tax” money.

    Not that it makes much difference in the effect: the government is enforcing a subsidy to the insurance companies; it’s just an indirect subsidy rather than a direct one.

    I agree: the main problem with Obamacare is that it does not actually reform health care in this country.