More American Health Care Reform Fallout

Sally Pipes:

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 exchanges.”

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 all.”